In the period from the beginning of 2010 to the end of 2010, there were no less than 520 stocks on the precious metals-heavy TSX Venture exchange that returned over 100% in value within the 12 month period. No other class of public company equity even comes close, with most other sectors performing as net losers in the same period. No other exchange can demonstrate anywhere near that number of stock doubles within a single sector.

The TSX Venture composite index shot up an incredible 48% in 2010, which makes it one of the world’s best performing stock exchanges for the year. Compare that performance to the measly 17.85% offered up by the Dow Jones Industrials or the paltry 12.6% delivered by the S&P 500.

Its not just the level of performance that is enriching investors. On December 17 the TMX Group announced that Toronto Stock Exchange and TSX Venture Exchange together established a new trading volume record yesterday, December 16, 2010. Year-to-date combined volume traded was 166,174,821,823 shares, which surpassed the previous record of 165,351,274,278 set on December 31, 2009.

So the increased liquidity in these exchanges demonstrates that the trend for 2011 is clearly for more investment in natural resources and commodities.

The surge in commodity performance has also been a boon to the Canadian dollar, which rose to an 8-month high on the back of commodities prices.

Possibly the best trades investors can make in 2011 is to take their declining in value U.S. dollar holdings, use those to buy equities in the surging precious metals exploration stocks, and then sell them in Canadian dollars in a year’s time. Investors will capture not just the leverage to the prices of gold and silver offered by successful Canadian juniors. They will also benefit from the strengthening Canadian dollar versus the U.S. dollar as that trend continues into 2011.

Approaching irrational exuberance?

RUF