Putting the junior mining stocks in perspective

Like everyone else who is heavily invested in junior mining stocks, many of which have recently filed stunningly high quality 43-101 reports and drilling assay results, I have been rendered speechless by the unexplainable continued sell-off in these stocks, especially relative to the large cap mining stocks, gold/silver, and even the broad market equity indices. I think this chart, which shows the Toronto Stock Exchange Venture index vs. the price of gold (the TSE-V being representative of an index of junior mining stocks) over the last 3 years pretty much sums up what is going on:

http://stockcharts.com/h-sc/ui?s=$CD...

The price of gold roughly has gone roughly from $400 to $900 during this same time period.

In the context of contemplating this unexplainable phenomenom, I was thinking that in 25 years of involvement in the stock market, I have never seen such an enormous dislocation between the fundamentals and actual market values. Silly me. From roughly 1998 to the spring of 2000, we witnessed an unbelievable dislocation in the fundamental value of internet/tech stocks and their corresponding market values - only unexplainably to the upside. As everyone knows, that dislocation, once it started correcting, correctly itself very quickly and sharply, taking many internet stocks with no fundamental value back down to zero, where they belonged.

I fully expect the current market value dislocation going on in junior mining stocks to correct itself to the upside with the same kind of speed and sharpness that we saw to the downside during the internet bubble correction. And to extend the thought to the next step, we will eventually see a capital rush into the good quality juniors that will be labelled another bubble. I have no idea when this will happen, but when it happens it will surprise everyone, including the faithful - and those who are patient with positions will experience a change-of-lifestyle increase in wealth....for what it's worth, Dave in Denver

On that note a well known hedge fund from the West Coast told a colleague that the gold/silver stocks in the junior/exploration sector had gone to a 8 STANDARD DEVIATION to the downside compared to the price of gold and silver. That degree of deviation might be unprecedented.

That is the bad news. Remember Newton’s Law: For every action there is usually an equal and opposite reaction. As horrendous as this sector has been, it will most likely eventually go to an 8 standard deviation ABOVE the prices of gold and silver when the US public enters our arena. It will be like something never seen before, including the internet bubble.