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24 www.resourceworld.com F E B R U A R Y / M A R C H 2 0 1 9 I n the larger picture, the first chart shows the CDNX Index, which rep- resents many of the junior mining companies we follow (but not perfectly). They tried to breakout in early 2018 after moving sideways for more than a year and half from the late summer highs of 2016. They then slipped back into a down - trend in early 2018 and then bottomed on December 24, 2018 at 528. Since that low, the index has climbed steadily up, about 13.5% in early 2019. However, what the CDNX chart above hides are the positive moves some compa - nies made in the space, despite the difficult market. So, we will look at the traits of the companies that did well in 2018, for clues on what could continue to work in 2019. But first I will show charts that make us believe that 2019 could be a very good year in the precious metal space. The Gold Chart (p 25) shows that gold bottomed on August 16, 2018, yet despite a ~10% rise in gold off its lows, precious metal shares lagged, much like 2016. (First posted on August 22, 2018) (The Gold:Silver Ratio is how many ounces of silver it takes to buy one ounce of gold.) Historically, this ratio suggests that investors are willing to take on more risk when silver is outperforming gold and, therefore, more money goes into the riskier asset classes as the risk on trade takes hold. When silver rises faster than gold, as it is now, it suggests growth and inflation are rising, giving investors reasons to look at all tangible assets to protect purchasing power. In the chart on page 26 we are begin - ning to see silver outperform gold after trading at historical highs. 2018: THE PERFECT STORM It was hard to make money in the last half of 2018 in this sector, with the US imposing tariffs on China, the threat of higher inter- est rates, the short term strength in the US dollar, coupled with the threat it would go higher, the lack of timely assay results, gen- eral investor pessimism, equity raises in a weak market, and lastly, tax loss selling – all contributed to a weak year overall. The shotgun approach or a lot of names, ETFs, or precious metal funds did not do well in 2018. However, in stealth-like fashion, the tricky precious metal space had some big winners, and it was the rifle - man's approach in 2018 that did well, but it required work. In 2018, we saw the takeovers of Nevsun, Dalradian, Northern Empire, Richmont, and Klondex, to name a few. We saw exploration success with Sun Metals, Corvus, Westhaven, Great Bear, and GT Gold. All the names, and I have missed some, were either taken over, had good exploration success, or were part of jurisdictional diversification or consolida - tions of existing land positions, (area plays), where property synergies made sense, as rea- sons for the share prices going higher. How to buy in a recovering market FOLLOWING A PAINFUL DECLINE, SOME QUALITY MINING SHARES ARE POISED FOR RECOVERY. HERE'S HOW TO IDENTIFY THEM. by John Newell INVESTMENT Courtesy StockCharts.com