What Happened to the Juniors?During the two silver bull markets in 1980 and 2011, the valuations of junior mining stocks were affected dramatically.
- 1980 Silver Bull Market:
- During the 1980 silver bull market, junior mining stock valuations experienced a significant increase. The skyrocketing silver prices and heightened investor interest in precious metals prompted a surge in demand for silver mining companies, including junior mining companies.
Investors recognized the potential for junior mining companies to benefit from the rising silver prices, as they have significant exposure to silver assets. As a result, the valuations of many junior mining stocks rose substantially during this period.
- 2011 Silver Bull Market:
- In the 2011 silver bull market, junior mining stock valuations also experienced notable effects. The increased investor interest in silver and precious metals during this period contributed to a surge in demand for junior mining companies. At this time, First Majestic Silver appreciated 400%, while Fortuna Silver Mines appreciated 1500%.
As silver prices climbed to $50 per ounce, investors sought exposure to silver mining companies, including junior miners, which provide tremendous leverage against the price of the underlying commodity, in the hopes of capitalizing on the rising metal prices. The positive sentiment surrounding silver and precious metals, along with the broader rally in commodities, led to significant gains in the valuations of many junior mining stocks.
And for Uranium?
They had epic runs, some stocks increasing 100X in price. Do your research.
A Valuable Lesson From Degen Traders
The 2017 crypto bull market was the quintessence of unregulated capitalism, with new technology searching for valuation, and a ton of dog-shit scam projects that fleeced delirious speculators from hard earned cash. It was an old fashioned gold rush, or shall we say, coin rush, that was a significant event in the history of cryptocurrencies, characterized by a rapid and dramatic surge in prices across the market.
But what can we learn from this unbridled chaos that might inform a strategy on the coming silver and uranium bulls?:
A Rising Tide Lifts All Boats:
- The phrase "a rising tide lifts all boats" encapsulates the phenomenon observed during the 2017 crypto bull market. The surge in prices for Bitcoin, the largest and most well-known cryptocurrency at the time, sparked a widespread increase in investor interest and a surge of capital flowing into the broader crypto market. This influx of capital led to a generalized increase in the prices of various cryptocurrencies, regardless of their underlying fundamentals or viability.
Meme Coins and Projects with No Real Infrastructure:
- During the 2017 bull market, a significant number of cryptocurrencies emerged, including meme coins and projects with no real infrastructure. Meme coins, in particular, gained significant attention and saw astronomical price increases. Dogecoin, a coin with open source code and no other claim to fame than an ironic picture of a Shiba Inu on it, for example, appreciated %6000 in 2017 (and it appreciated %25000 in the 2021 bull run).
The speculative frenzy and the "fear of missing out" (FOMO) mentality prevalent during the bull market led to investors piling into these meme coins and other projects, irrespective of their underlying technology, utility, or value proposition. This resulted in a surge in their prices by hundreds or even thousands of percent.
Lack of Fundamental Value:
- One of the notable aspects of the 2017 bull market was the detachment between price appreciation and the underlying value or utility of many cryptocurrencies. Several projects lacked robust infrastructure, viable use cases, or real-world adoption. Despite the absence of tangible value, market speculation and hype drove prices upward, creating an environment where price momentum and investor sentiment dominated.
As the crypto market continues to evolve, the lessons learned from the 2017 bull market have influenced investor behavior and the broader industry landscape. Market participants have become more discerning, emphasizing the importance of evaluating the fundamentals, technological innovation, team competence, and real-world adoption potential of cryptocurrencies before making investment decisions.
I’m just kidding, the same thing happened in 2021, only worse. Speculators yet again rushed into projects promising life in the metaverse - one guy spending $450,000 to buy a digital house in the metaverse next to Snoop Dogg’s digital house in the metaverse.
Another paid $23.7 million for a pixilated Crypto Punk NFT that looks like a computer generated image from the 80’s. He said it commanded this high price because it was one of only a few Crypto Punks wearing a hat.
The moral of the story here is that people are idiots, human nature won’t change, and where there’s hysteria, like we’ve seen in each of the last two crypto bulls, and each of the last two silver bulls, the only thing latecomers care about is “Money Go Up.”
And when market leaders start to look a little pricy, like Bitcoin at $20K in 2017, or $65K in 2021, then money flows from leading brands to smaller projects in search of higher beta - usually to catch a wave of buying that hasn’t begun, but often because one missed the first boat, and sees the silver, the memecoins, and the uranium juniors as the boat that hasn’t left the dock yet.
I by no means am comparing silver to dogecoin in terms of value, but I am suggesting a large portion of investment enters the silver market because it plays the role of cheaper money relative to gold, literally donning the moniker ‘poor man’s gold.’ Those who can afford gold, buy gold. Those who can’t buy silver.
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