https://aheadoftheherd.com/a-1982-everything-rally-will-spark-multi-year-bull-market-richard-mills/

 Worth the read 

Here are couple of excerpts from a Rick Mills article...

 herbie1 

First, second, third movers

Back to mining stocks, when commodity prices rise, there is a definite pattern to which type of mining company leads the sector, and which ones follow.

As commodities rise, major mining companies see an almost immediate lift in their share prices, which makes sense; their profits increase from realizing higher metals prices.

Over time, money trickles down to mid-tier producers, which generally trade for lower prices but can rise quickly in a bull market, bagging handsome returns for shareholders.

Finally, investment capital makes it down to the smallest mining companies — the explorers, aka the juniors. While juniors are the most speculative and most risky, they also historically offer the best leverage to rising commodity prices.

A junior resource company’s place in the food chain is to acquire projects, make discoveries and hopefully advance them to the point when a larger mining company takes it over. Discoveries won’t be made if juniors don’t have boots on the ground, if they aren’t out in the bush poking around and busting rocks.

Investing early in the development cycle of the right gold junior, one that has an excellent project in a safe jurisdiction led by experienced management with the ability to raise money, can reap huge rewards — 5, 10, even 20 times your money isn’t uncommon.

Juniors are extremely important to major mining companies because they are the firms finding the deposits that will become the next mines. In this way, juniors help the majors to replace the ore that they are constantly depleting in their operating mines. Put another way, juniors find the resources for majors to turn into mineable reserves.

And...

All that cash sitting on the sidelines is about to be unleashed. Again, any day now. Well, now the day is here so we will see if they are right.” The FT says, “​It is hard to ignore the size of this asset class. Added together, money market funds hold easily north of $​6tn in the US…

The mining sector in comparison to the rest of the stock market is small. It doesn’t need $6 trillion to move prices; even a billion dollars flooding into resource orientated stocks would be enough to wake up sleeping mining equities.

Conclusion

Majors, mid-tiers and juniors all look ripe for a rebound in what is increasingly a risk-tolerant environment now that “the punch bowl” of monetary easing/ lower interest rates is back on central banks’ agendas. Lower rates should put pressure on bond yields and the US dollar, which normally fall as commodity prices rise.

The majors as seen by the recent performance of the S&P/TSX Global Mining Index have already started moving. It’s only a matter of time before the money trickles down to the mid-tiers and the juniors, which offer the best leverage to rising commodity prices and to own the world’s future mines.

The majors have been consolidating as a way of increasing their metal reserves but they are running out of companies to merge with or acquire. The only way for them to get new resources to turn into mineable reserves is to buy juniors or partner with juniors. That, along with the return of investors to junior mining, are two trends that we at AOTH are following.

Richard (Rick) Mills