Greetings!
If you haven't heard of the PDAC curse, you're in for a tale of woe and despair. PDAC, for those of you unaware, stands for the Prospectors and Developers Association of Canada. The annual PDAC Convention was attended by nearly 30,000 mining people earlier this week. Because corporate executives don't like going to jail, most juniors with any sniff of positive news will release their results just before or during the convention. That frees them up to promote unfettered. BNN broadcasts live from the floor and conducts interviews with quotable executives and analysts. Its a pretty big deal.
Its also a massive party. Between the hospitality suites at the Royal York, InterContinental and surrounding establishments, there's enough free flowing alcohol to float a cruise ship. Everybody is out of their office and trying to keep up to the markets on their Blackberry's between lunches, meetings, and receptions. A goodly percentage of resource stock investors would be "feeling the effects".
Picture the young zebra contentedly grazing on the lush savannah. The rains have been good this year providing 7 fertile months... then BLAMMO!!! ...circle of life. That's the PDAC curse.
The chart below is a 10 day hourly chart of the TSX Venture Composite Index, a decent proxy for how resource juniors are doing. By the end of PDAC, the index was down 200 points.
I'm not sure of the origin of the term "PDAC curse" but I learned about it from John Kaiser. His take is that "9 out of the past 10 years everyone bailed out of the resource stocks in March so they'd be out before May."
The junior resource sector does have an element of seasonality to it. Promoters, bankers and brokers take holidays just like us regular folk. The investment nugget "Sell in May and go away" does have some merit, especially with thinly traded juniors. The key question now is whether the junior resource market can recover from this swoon before summer. I'll have more on that in my next newsletter.
Jim's Online Shopping Tip
You can get some pretty good deals via Groupon. It turns out that the lead singer of one of my favorite bands, David Lowery of Cracker, was on their advisory board.
Click here to sign up to Groupon - click the CITY named at the top of the page to localize your offers.
Upcoming Conferences
Calgary Resource Investment Conference - April 9-10
Saskatchewan Investment Conference - May 6-7
New York Hard Assets Conference - May 9-10
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