First let me say that I was way to bullish on an early TCL/DCL based on the price action I was seeing in both Kirkland Lake (KL) and Novo Resources (NSRPF). Both found their cycle lows much earlier than the rest of the complex by a couple of weeks.
Three charts are attached: GDXJ, KL and Novo. Their are Junior’s (i.e. GDXJ) and then there is the real McCoy, IMO and the comparison is very telling with respect to the strength of these two small Junior miners. While there is more risk with a single miner vs a basket of them like GDXJ (i.e. they may crash tomorrow on some kind of bad geology news), the offset for me is that the mining ETFs are Wall Street creatures that have a basket of cats and dogs that can also be manipulated lower. Another offset to the single miner approach with these two is that big industry names are acquiring shares, including Eric Sprott who has major positions on both.
My normal approach is to trade the swings but these may be keepers if you believe the Secular Gold Bull has resumed out of a Cyclical Bear Market. Why? Because they are likely prime takeover targets by a larger fish. If you take your chips off the table, you may miss a one day double in price if they get acquired.
I will add some additional information on both these miners for you to review but for now just compare the charts of Novo and KL to GDXJ… GDXJ had a wicked retrace greater than the 62% level that I like to see. Compare that to the Novo and KL charts. Sometimes a picture is worth a thousand words.
For more on the Novo and Kirkland Lake story, please see this post: