Quiet board........still rest off those large helpings of Thanksgiving Dinner?

LOL

Miners always have a tough job, but the last year has been brutal.

It seemed as though small mining companies would skyrocket at any moment...

They were consistently discovering more gold.

Many of them had incredibly experienced and talented management teams and plenty of cash.

Gold prices were way up and were still on a long, upward trajectory to an all-time high of $1909 per ounce in late August 2011.

And yet investors were fleeing from the companies that were finding more and more gold in the ground every day...

The S&P TSX Metals & Mining Index dropped 33% in a year starting at the end of July 2011.

Here is how things looked through the Claymore S&P/TSX Global Mining ETF, designed to replicate the performance of the S&P/TSX Global Mining Index:

At the same time, equity financing for small miners was collapsing at a rapid pace.

In the spring and summer of 2011, roughly $2 billion was raised through 80 deals. By the end of spring and summer the following year, a mere $400 million was raised through fewer than 30 deals.

That's an 80% drop.

So, what happened between now and then?

Well, the global economy is still in shambles and uncertainty rules the markets.

The euro still looks like it will collapse; Europeans are still doing everything they can to mask a full-blown depression in Greece and an impending depression in Spain.

The currency used by 17 nations could still implode at the hands of bickering and/or negligence any day now...

And here at home, the economy is still on the brink of collapse. The lack of budgetary control in the United States is the same underlying cause for last year's debt ceiling disaster and the upcoming fiscal cliff crisis.

China is still doing everything it can to mask slowing economic growth and boost its economy through massive government-financed capital projects.

The only change we saw was at the hands of the European Central Bank and the U.S. Federal Reserve...

Any semblance of restraint for "stimulus" and quantitative easing is now officially gone: They confirmed that no-strings-attached cash is going to pour into debt-laden and bloated first world economies non-stop until things get better (or cease to exist).

The silver lining in all this doom and gloom?

It caused people to wake up and breathe new life into bruised and battered Canadian miners.

Investors realized there's a big difference between companies that watch revenue disappear into worthless currencies or recession, and companies that earn their revenue by pulling the world's best currency hedge straight from the ground.

The S&P TSX Metals & Mining Index has increased almost 13%.

Remember the Claymore S&P/TSX Global Mining ETF?

Here it is again, starting right where the previous chart stopped:

And this is only what's happening on the surface...

The big institutional investors are flooding back into small gold miner equity financing.

Sandstorm Gold Ltd. was one of the first to secure new funding. The company recently raised $150 million.

Last week, Premier Gold Mines and Torex Gold Resources Inc. outlined plans for deals to fund their gold projects. The two small mining companies together pulled in a total of $410 million.

These small gold mining operations have managed to pull in 40% more from three deals in a single month than 30 deals in six months last year.

And physical gold is following the same path...

Take a look at the correlation between this chart and the Claymore S&P/TSX Global Mining ETF chart above:

The full-fledged investor rush into gold and gold miners is back on track while everything else is mired in uncertainty.

In an age of unlimited quantitative easing – and unlimited devaluation and inflation risk — investors are moving back to where they should have been the whole time.

Adam English

Cheers

W.C. Guy