Facing a major crisis of confidence, banks underwent a 180-degree turn: Whereas they were previously almost force-feeding us loans, banks are now terrified to even include them on their menus. Yet business must move forward. So deals are still getting done, but in non-traditional ways.
And no sector has shown a stronger ability to overcome this liquidity drought than the mining industry.
In the past few months, natural-resource players have gone on a $42 billion fundraising spree, in which every single dollar has come from outside the regular banking system. Instead, investment banks have been busy raising fresh capital for the mining industry in a variety of ways. And in some cases, individual investors have taken things into their own hands.
Most of the action has been in the form of private-equity placements. Essentially, a consortium of investment banks agrees to buy an issue of shares at a fixed price (called a bought deal), and to resell those on the secondary markets to individuals and institutional investors. The issuer gets to keep the cash raised, minus fees.
Junior miners are an essential part of a long-term bull market in the natural-resources sector. But the business cycle - or the pesky credit crisis - still wreaks havoc on their best-laid plans. And when that happens, their ability to think creatively can allow them to swim rather than sink.
For these smaller players, the ones with promise of near-term gold production, or with existing gold mines, have the best shot at accessing capital.
While bank lending is at a virtual standstill, mining companies of all sizes have found ways to get financing outside of traditional credit markets.
Deals are still getting done - even while people are spending less and saving more, and even though many investors are afraid to invest. But for the most-attractive deals, cash is finding its way out of pocketbooks, and into a few select coffers.
That money, quite interestingly, is overwhelmingly accessible to one sector: Mining.
Investors are courageously committing capital, especially in return for unsecured common shares, clearly expecting healthy returns in the coming years.
And informed investors know that hard assets, and tangible natural resources, have always provided the best protection against the ravages of the U.S. Treasury's printing press.
Investors would be wise to follow their lead.