(Kitco News) – Investment in the mining sector is heating up and one company is taking advantage of the new momentum by launching a new index of junior producers and explorers.
Thursday, EQM Indexes announced the launch of the EQM Pure Junior Gold Miners Index (JRGOLD). In a telephone interview with Kitco News, Jane Edmondson, CEO and co-founder of EQM Index, said that now is the first time to be in the mining space and the junior sector offers the most value for investors.
“We are really bullish on the gold price right now. Gold has been rocketing up based on the fact that we have negative interest rates around the world. Post-COVID, we’re probably going to be worried about inflation, so it just really makes a lot of sense right now to gold,” Edmondson said.
Edmondson added that in a world of rising gold prices, the mining sector looks more and more attractive to investors.
“Obviously, you can own the physical gold, but the junior miners are going to be leveraged to the supply-demand dynamics that are going on right now,” she said. “There’s just really so much demand for gold and very little new supply coming online.”
Edmondson said that falling mine supply is going to remain a dominant theme in the gold mining space. In this environment, junior miners are attractive targets for senior producers who will be forced to buy production, she added.
What makes the EQM’s new index stand out is that its holding is not governed by traditional market categories like a market cap. Edmondson said that the index uses production numbers and gold revenue percentage as part of its metrics. The index holdings include companies producing less than a million ounces of gold a year, a junior company.
For junior explorers, the index looks at companies with a market cap of more than $100 million.
For many indexes, smaller-cap mining and exploration companies are difficult to invest in because there is very little liquidity in the marketplace. However, Edmondson said liquidity is starting to improve as more investors jump into the market.
Edmondson said that with their unique approach creating the index, they are able to create a better pure junior play for investors.
Edmondson added that they are planning to launch sometime next month an exchange-traded fund to track the index.
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