Mining Stocks
While sometimes risky, mining stocks can also be strong performers when commodity prices move up. However, due to the volatility of these stocks, Pat McKeough recommends that they only form a modest part of a well-balanced portfolio.
Canadian penny mining stocks are some of the riskiest stocks you can buy. These companies are trying to find mineral deposits that mine at a profit and such a find are exceedingly rare. Because of this, it’s even more important to look for investment quality in penny mines.
For example, we automatically rule out investing in penny mines that promote themselves too aggressively or do so misleadingly. The mine-finding effort is more likely to succeed if the managers focus on finding a mine rather than hyping their stock.
Junior mining stocks are usually smaller companies that typically take on riskier mining projects. However, if a junior mining stock is successful at finding and mining, it can mean huge returns for investors.
No matter what type of mining stocks, or other stocks you invest in, TSI Network recommends following our three-part Successful Investor strategy:
- Invest mainly in well-established, mostly dividend-paying companies;
- Spread your money out across most if not all of the five main economic sectors (Manufacturing & Industry; Resources & Commodities; Consumer; Finance; and Utilities);
- Downplay or avoid stocks in the broker/media limelight.
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When markets rebound, we tend to hear from more investors asking whether they should invest in junior mines. My first answer is that you should have your portfolio spread out among the five main economic sectors (Manufacturing & Industry, Resources & Commodities, the Consumer sector, Finance and Utilities). Still, junior mining stocks can play a role in that part of your portfolio you have for more aggressive investments. Even then, it is important to realize just how long the odds against success can be before you proceed....
In September 2011, gold hit an all-time high of $1,900.30 U.S. an ounce. It now trades at around $1,772.50. Gold could well regain its highs and move up even further over the longer term, although it will likely remain volatile. Higher prices would arise from investor fears that inflation or global political and economic instability will hurt key currencies, such as the euro or the U.S. dollar. We feel that it’s okay to hold some gold or silver stocks as part of the Resources component of a well-balanced portfolio, but you’ll want to keep them to a reasonable part of that portfolio....
Gold prices have moved down from their peak of $1,918 an ounce in August 2011 to the current price of $1,571. Gold could well regain its highs and move up even further over the longer term, although it will likely remain volatile. Higher prices would arise from investor fears that inflation or global political and economic instability will weaken key currencies, such as the euro or the U.S. dollar. If you do hold gold stocks, we recommend that you keep them to a reasonable part of the resources component of a well-balanced portfolio. YAMANA GOLD (Toronto symbol YRI; www.yamana.com) owns seven operating gold mines in Mexico, Brazil, Chile and Argentina. It also holds a 12.5% stake in the Alumbrera copper/gold mine in Argentina, and has three other properties in advanced stages of development....
Pat McKeough responds to many personal questions on specific stocks and other investment topics from the members of his Inner Circle. Every week, his comments and recommendations on the most intriguing questions of the past week go out to all Inner Circle members. And each week, we offer you one of the highlights from these Q&A sessions. This past week, an Inner Circle member asked us about one of the mining stocks involved in the quest for rare earth metals. China’s iron grip on the rare earth market is a key factor in the pricing of these minerals, Pat notes, and he looks at how this stock is working to contest it with a re-opened mine and a new acquisition. ...
Pat McKeough responds to many personal questions on specific stocks and other investment topics from the members of his Inner Circle. Every week, his comments and recommendations on the most intriguing questions of the past week go out to all Inner Circle members. And each week, we offer you one of the highlights from these Q&A sessions. Last week, an Inner Circle member had a particularly intriguing question about commodity stocks. Specifically, he wanted Pat’s opinion on a company that is using a revolutionary technology in an area in which traditional methods don’t work....
Pat McKeough responds to many personal questions on stocks and other investment topics from the members of his Inner Circle. Every week, his comments and recommendations on a selection of the most intriguing questions of the past week go out to all Inner Circle members. And every Friday, we offer you one of the highlights from these Q&A sessions. This week, an Inner Circle member asked Pat about one of Canada’s major mining stocks. Labrador Iron Ore Royalty has quietly built a position as a world leader in iron ore. Now it faces several challenges in today’s volatile commodity markets....
Newmont Mining Corp., New York symbol NEM, links future dividend hikes to the price of gold: it will raise the quarterly rate by $0.05 a share for each $100-per-ounce rise in its average selling price for gold in the preceding quarter. The company has now enhanced this policy. If gold prices exceed $1,700 an ounce, it will raise the quarterly dividend by an additional $0.025 a share, for a total increase of $0.075 a share. If gold prices rise above $2,000 an ounce, Newmont will raise the dividend by an additional $0.05 a share, for a total increase of $0.10 a share....
CanAlaska Uranium Ltd., symbol CVV on Toronto, has agreed to sell up to 3,150,000 units for $0.69 each. Each unit consists of one common share and one half of a warrant. One whole warrant will let the holder buy an additional common share for $0.83. CanAlaska will receive roughly $2.2 million from the unit sale. That’s equal to 22% of this uranium stock’s $10.1 million market cap. It will use the cash to further explore and develop its 21 uranium projects in Saskatchewan’s Athabasca Basin region, sometimes referred to as the “Saudi Arabia of uranium.”
Uranium stocks: CanAlaska has one of the largest positions in the Basin
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Could I have your opinion on Thompson Creek Metals? There is a lot of enthusiasm in B.C., but the market does not seem to share the same optimism.
Cameco Corp., symbol CCO on Toronto, has launched a hostile takeover bid for Hathor Exploration (symbol HAT on Toronto). Cameco is offering $520 million, or $3.75 a share, for this uranium exploration company. Hathor’s main exploration properties are on the east side of the Athabasca Basin. This region in northern Saskatchewan and Alberta contains all of Canada’s producing uranium mines, and accounts for 23% of the global production of uranium. Right now, Hathor is exploring for uranium at its Midwest Northeast project, which is close to producing properties that are currently owned by Cameco and AREVA of France....