Multi-Year High Weekly Close For The TSX-Venture, Junior Gold Producers Outperform Gold In May
The TSX-Venture Composite is at 3-year highs, the gold mining sector was strong in May, but bulls still remember last summer.
Does anyone remember when it felt like July 2003 for the Venture? That was two months ago, and just before the early April “Liberation Day” tariff turmoil. One last shakeout that set the stage for a chart pattern breakout that has been brewing since late 2024.
TSX-Venture Composite (Daily)
May proved to be a very good month for Canadian small caps, especially junior gold producers & explorers. Zooming out to a weekly chart we can better understand how early this is in a breakout move from a 36-month bottoming pattern:
TSX-Venture Composite (Weekly)
While there is minor resistance in the TSX-V Comp near last week’s high ~705, the next serious resistance levels are 760 (~10% above Friday’s close), followed by 860 (~23% above Friday’s close).
The TSX-V Index is composed of approximately 60% natural resources (gold, oil, etc.) and around 30% technology, with the remaining sectors making up less than 10%. Canadian-listed micro and small-cap companies that trade on the TSX-V are generally considered the highest-risk segment of the stock market.
A simple way to understand capital flows into and out of Venture stocks is by following real interest rates, which serve as a useful proxy for the "cost of capital." In 2020, when global central banks took extraordinary action and real rates plunged into deeply negative territory, Venture-listed stocks performed exceptionally well. However, when the Federal Reserve aggressively tightened monetary policy during 2022–2023, pushing real rates well into positive territory, capital dried up, and the TSX-V Composite was cut in half.
So far in 2025, we are beginning to see real yields edge lower (down 40bps since January). But with the 10-year real interest rate up at 1.67%, by no means should we expect another 2020-esque risk-on orgy in micro-caps :
I expect that we will need to see the 10-year real rate fall below 1.00% in order to get a true “whiskey bottle poured into a shot glass” rally for the Canadian penny dreadfuls.
Meanwhile, the mid-tier and junior gold producers that comprise the GOEX exchange-traded fund are at decade+ highs:
GOEX (Daily)
The fact that higher-beta gold miners performed so well over the last month despite the gold price essentially trading flat is a very positive development; this is a strong indication that the gold mining bull market is evolving, portfolio managers are deploying capital down the food chain into lower market cap companies. And most importantly, as evidenced by some of the recent financing activity (New Found Gold raising more than C$70 million, Fireweed Metals raising C$60 million, etc.), more capital is gradually flowing into the junior mining sector.
Well-constructed multi-year chart pattern breakouts, strengthening momentum, improving capital availability, and a busy summer of drilling across North America - what’s not to love?
One final point I’ll make is that June has a strong historical tendency to be a lackluster month for the Venture, let’s see if this year is different.
In my experience, seasonality provides the most useful information when the market in question bucks its seasonal tendency. A green June for Canadian resource small/micro caps would offer some of the best confirmation that this bull market is the real deal.
DISCLAIMER: The work included in this article is based on current events, technical charts, company news releases, corporate presentations and the author’s opinions. It may contain errors, and you shouldn’t make any investment decision based solely on what you read here. This publication contains forward-looking statements, including but not limited to comments regarding predictions and projections. Forward-looking statements address future events and conditions and therefore involve inherent risks and uncertainties. Actual results may differ materially from those currently anticipated in such statements. This article is provided for informational and entertainment purposes only and is not a recommendation to buy or sell any security. Always thoroughly do your own due diligence and talk to a licensed investment adviser prior to making any investment decisions. Junior resource companies can easily lose 100% of their value so read company profiles on www.SedarPlus.ca for important risk disclosures. It’s your money and your responsibility.