The last two decades were not kind to small natural resource stocks, but that will change soon.
The Toronto Venture Index is like the Dow Jones Industrial Average of small-cap natural resource stocks. It’s the home of most of the micro-cap miners and oil explorers.
These little companies are finding gold, silver, rhodium, lithium, nickel and more. They turn intelligence, hard work and luck into money. And with rising metal and energy prices, those discoveries can become even more valuable.
From its start in 2001, the Toronto Venture soared and collapsed in dramatic fashion.
While the S&P 500 Index spent the last 20 years going up nearly 170%, this forgotten sector of the market fell 60%.
I believe the setup in this sector will be a huge wealth-building moment for those investors with the fortitude to get in.
As you can see from the chart below, it spent most of the last 20 years locked into boom-bust cycles:
These stocks tend to be volatile. They move sharply higher and then come crashing down. Here’s a quick breakdown of its trends:
- 2002 to 2007: +257%.
- 2007 to 2008: -77%.
- 2008 to 2011: +257%.
- 2011 to 2016: -80%.
- 2016 to 2018: +95%.
- 2018 to Today: -58%.
The index fell to 392 in the epic market collapse on Thursday, March 12. That’s an all-time low. Investors threw in the towel on these tiny natural resource stocks.
In my specialty newsletter, Front Line Profits, we specialize in looking for the best companies in the micro-cap space. And it was a tough market for the last couple of years.
However, that’s about to change in a huge way. And when it does, I expect to see the entire index double, triple or even quadruple … as it has in the past.
We’re making our wish list and watching the trend. Because we’ll be on the front line when it’s time to buy.
Good investing,
Editor, Front Line Profits
