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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Gold closed at an all-time high of $1,475.00 U.S. in Friday’s trading. It now trades at around $1,468, up 27.4% from a year ago. Gold’s recent gains have partly resulted from investor fears about the sovereign debt of European countries after Portugal requested a bailout from the European Union and International Monetary Fund. Investors are also worried about political turmoil in Libya and other Middle Eastern countries, as well as the possibility that today’s artificially low interest rates and governments injecting money into their economies will spur a huge rise in inflation. These fears are prompting more investors to buy gold and gold investments, because they believe investing in gold will provide them with additional security....
Japan’s reconstruction could prompt a further rise in copper prices. This new FREE report shows you how you can profit with less risk. Copper continues to attract a lot of investor attention. That’s because copper prices recently hit an all-time high of $4.62 U.S. a pound. That’s up sharply from a low of $1.25 U.S. in late 2008. Copper prices fell to around $4.10 U.S. a pound in the wake of the Japanese earthquake and tsunami, but have moved up since then. The dip in copper prices mainly reflects investor fears that copper demand will drop because the disaster has slowed Japanese industrial production. But that’s just temporary. As the reconstruction of Japan gets underway, the need for wiring, piping, and other copper-based products will be great. That could prompt a further rise in copper prices....
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Members of our Inner Circle service often ask for our advice on stocks they are thinking of buying that we don’t cover in our newsletters. These companies range from large multinational companies to the most speculative penny mines and gold investments. For example, an Inner Circle member recently asked for our advice on Northern Abitibi Mining. The company has reported some promising drill results from its gold project in Newfoundland. To give you a sense of how my Inner Circle service works, I’d like to share this question, and our answer, with you. I hope you enjoy and profit from it....
All gold investments, even large, multinational gold-mining stocks like Newmont Mining (symbol NEM on New York), are somewhat speculative, due to their sensitivity to gold prices and the difficulty of finding gold mines. That’s why we recommend that you limit them to a small part of your overall portfolio — this is especially true of more volatile junior gold stocks. (You can get our latest views on the outlook for gold, as well as our latest advice on lower-risk gold investing strategies, in our free special report, “Gold Investing: 7 Profitable Strategies for Investing in Canadian Gold Stocks.” Click here to download your copy now.)...
Higher commodity prices and an improving global economy have pushed up the prices of many junior mining stocks recently. That has prompted more members of our Inner Circle service to ask us for our recommendations on junior mines they are considering investing in. (See below for further details on a junior firm that explores for rare earth elements, which have attracted a lot of investor attention lately. We recently analyzed this company for a member of our Inner Circle service.)
Junior mining stocks have strong potential — but use caution
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Gold now trades at around $1,226.00 U.S. an ounce. That’s up 28.2% from $956 a year ago, but down from its all-time high of $1,261.00 U.S., where it closed on June 28, 2010. Gold’s recent gains have partly resulted from investor fears about the sovereign debts of European countries, especially Greece and Spain. That’s creating uncertainty about the strength of the euro. These fears are prompting more investors to buy gold and gold investments, because they believe investing in gold will provide them with additional security. We think gold could well move higher over the longer term, due to investor concern that low interest rates and large amounts of government stimulus spending will spur inflation. This could prompt even more investors to flock into gold —and drive prices up even higher....