By Adam Hamilton – Re-Blogged From http://www.Gold-Eagle.com
The smaller gold-mining and exploration stocks have enjoyed an amazing year, soaring with gold’s new bull market. Many have more than doubled since mid-January, and some have more than tripled at best in that short span. Are such spectacular gains fundamentally-justified, or merely the result of ephemeral sentiment that could vanish anytime? The gold juniors’ recently-reported Q1’16 results offer great insights.
The junior gold miners and explorers play a critical role in the world gold market. They bear the major costs and risks associated with discovering and sometimes developing new economically-viable gold deposits. They painstakingly find the new gold reserves to offset the constant depletion of the world’s existing gold mines, acting as the headwaters feeding the global mined-gold-supply pipeline vital to this industry.
The larger gold miners rely extensively on the juniors’ crucial exploration and early-development work to maintain and replenish their own operations. While the majors certainly do their own exploration, it is far from sufficient to offset existing gold mines exhausting. So gold juniors are constantly targeted by the larger miners, which acquire these companies outright, buy their projects, or partner with them for development.