From The Gold Report:
Is the end near for the TSX Venture Exchange, the victim of "algo traders," low volume and lack of institutional investors? If newsletter writer John Kaiser is right, as many as 500 of the 1,484 resource companies listed on the Venture Exchange will go under this year due to lack of money in the bank. In this Gold Report interview, Kaiser suggests that a crowdsourced valuation system may give the investors the information they need to invest with confidence and fend off the proprietary traders.
The Gold Report: John, at the Cambridge Conference in Vancouver, you spoke about visualizing an alternative to "zombie land," the zombies being the 1,000-plus companies in the resource sector trading at less than $0.20 per share, which include a good number of the more than 600 companies with less than $200,000 in the bank. You predicted at least 500 would go out of business in the next year. Is this a more dire scenario than before or are there just more companies?
John Kaiser: In the junior sector, 1998-2002 was a very difficult period. Metal prices, especially gold, were weak. The Bre-X Minerals betrayal in 1997 had shattered investor confidence in the exploration acumen of the resource juniors. New and interesting exploration plays were few and far between. Area plays were dead on arrival. And the siren song of the dotcom bubble sucked away whatever risk capital remained in the hands of retail investors.
That five-year bear market was a very dark time for the industry, but it survived to experience a phenomenal bull market during which TSX Venture (TSX V) juniors raised $57 billion and over 200 Canadian resource juniors disappeared in takeover bids worth $115 billion.
TGR: So with only two years into the current bear market, why the fuss?
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