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Investor interest in marijuana stocks reminds veteran analyst of the dot.com bubble

Stockhouse Editorial
10 Comments| March 26, 2014


California investment newsletter writer John Kaiser says the sudden interest in marijuana stocks reminds him of the dot.com bubble that burst in 2000.

He is referring to the soaring value of Canadian resource companies such as Next Gen Metals Inc. (CNQ: C.N., Stock Forum), Satori Resources Inc. (TSX: V.BUD, Stock Forum) and Cavan Ventures Inc. (TSX: V.CVN, Stock Forum), which have expressed a liking for a move into the medical marijuana industry, and sending their share prices into the stratosphere.

Next Gen Metals, which has seen its stock price jump as high as 73 cents from 5.5 cents in recent weeks, said Wednesday it is adding a marijuana expert to its board of directors.

Junior miners’ increasing interest in the medicinal plant is “symptomatic of how difficult it has become in this sector,’’ Kaiser told the Financial Post newspaper. Kaiser is a mining analysts and publisher of Kaiser Research Online.

He said this reminds him of ploys by resources companies in the late 1990s and early 2000s to jump on the dot-com boom at a time when stock and commodity prices in the resource sector were collapsing in the wake of the Bre-X gold mining scandal.

Even experienced mining executives like Goldcorp Inc. (TSX: T.GStock Forum) Chairman Ian Telfer jumped on the dot.com bandwagon, before moving back into mining when the bubble burst.

“To me, it has a smell of an end of times type of mentality,’’ he told The Financial Post. “Where nothing means anything anymore, [and] it’s hopeless to raise money for real stuff in the resource sector.’’

Interest in the medical marijuana industry is tied to the Canadian Government’s decision,  via Health Canada, to allow licensed commercial growing of medical marijuana, starting on April 1. U.S. states, including Colorado and Washington are moving to legalize cannabis.

Out of the 1,750 resource companies tracked by Kaiser, 800 have less than $200,000 in the treasury and nearly 700 have negative working capital, he told the Post newspaper.

“What’s happening is medical marijuana is a concept that everyone can understand….It’s kind of like this bubble thing, for the moment,” he said.

Tags: INDUSTRIAL METALS & MINERALS

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rborhi
I just wish one of my stocks that is down 95% would announce they are getting into marijuana, I'd enjoy the pop the stock would get. There is a lot of money to be made in places where weed laws are becoming relaxed, just look what's happening in Colorado and the industry being built around there. Not saying any of the penny stocks mentioned in your article will have success or not, but venture stocks have always been about risk and reward.
2.5 stars
March 26, 2014
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G4General
How come THC was not mentioned as being a bubble? They have one of the largest market caps and no assets. Why are certain plays being targeted here and others are not mentioned. Saying the industry and those stocks mentioned are looking like a bubble is mind blowing. Do they know the market cap of those mentioned. If that is a bubble, I think the majority of the market is a bubble then because gaining $5 million in market cap has happened in many industries. I think using the term bubbl...
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March 26, 2014
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MarketLady
How can you say bud or cvn is a bubble. Are you covering micro caps that have less than $6million in market cap a bubble. Are you serious. There are many stocks that trade that have been up over 200% since January 1, 2014. Those must be a bubble too then. Maybe everything that goes up 100% from January in a specific sector is a bubble. It is not just in the medical marijuana industry where those gains were made.
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March 26, 2014
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drw1
CVN maybe focused on drilling yet where are they going to get the funds to do such work. Take a look at the company's latest MD/A. Company has been focused on its 'frog' intercept for sometime time now, just waiting for permits...LOL
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March 27, 2014
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ShortTermTrader
“To me, it has a smell of an end of times type of mentality, nothing means anything anymore.... (so sayeth Lord Kaiser)" The only end of times BS comes from Kaiser himself when he speaks at the conferences with his doom & gloom about all the juniors dying. Then when they do something creative for the shareholders Kaiser claims its "End Of Times!" Get with the program John. You move way too slow to make your subscribers any money.
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March 29, 2014
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4SeasVentures
LOL...POP. here is a junior that is mining aggregates in NW bC. HBK, Highbank resources just received its Mine act permit. This company has done it alone from discovery to production with less then 100 million shares fully diluted. This is a mining and BC success story John...you should do you DD.
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March 26, 2014
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wallstreet12345
Cvn was mention on this article. Doesn't he realize that Cavan is gonna be starting their 2 drill project? He has no idea what he talking about, Cavan is fully focus on their properties and is willing to build the company that will benefit shareholder value in Marijuana as well. The demand in medical Marijuana is growly steady, we need companies to supply the demand. What bubble?
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March 27, 2014
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2buyornot2buy
Yeah seriously with CVN I was like strastophere???
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March 27, 2014
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m0neybags
So retarded. How can something be a bubble after 4 weeks? Theres companies that will act on what they say and blow up like ATT and SL or theres everyone else who haven't done anything but say MMJ! If any of these companies acquire the means necessary to move forward then great but so far theres 1 ATT thats up and operational and 2 SL that could be operational if the deal gets done in 6 more days. Thats it thats all. Otherwise you better jump in and out like hot potato on these useless PU...
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March 29, 2014
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BULLISSHCOWBOY
omg,,kaiser still pumping emc at 2 pennies or git lolll...his plays took bloodbath
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March 26, 2014
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