![]() ![]() ![]() Focus on established areas: When we recommend mining stocks, we prefer those that operate in an area with geology that is similar to that of nearby producing mines.That’s a key consideration for your portfolio management planning. Seek strong reserves, low production costs and mines that are already producing: Good mining stocks have a range of development projects, but their strong base of production cuts the risk of relying on new developments alone.The prospects for most of these penny-mine, or junior mining, properties, even though they may be in areas with production from existing mines nearby, are far from certain. Many of these stocks must still add to their reserves, invest in mine-feasibility studies, and raise a lot of money before they go into production. Look into steady production when investing in minerals: Some of the most highly promoted mining stocks, including gold mining stocks, are penny stocks which have yet to produce an ounce of gold or other minerals.Mining companies can also increase their reserves by making acquisitions-with mineral prices down from their record highs, you may see an increase in mining company acquisitions at distressed prices. That way they are not dependent on a single mine’s production or political stability in any one country. Invest in stocks with a broad base of operations: Even if the company has strong reserves, the best mining stocks with the least risk also have a diversified reserve base.Those with low reserves need to have consistent success in their exploration programs to maximize the production of the mine and the surrounding area. Look for longevity in reserves: When you invest in any resource stock, gold included, you need to look at how long the company’s reserves are likely to last.The best among those funds will avoid or limit their exposure to jr mining stocks. If you want to hold a number of gold or silver stocks, many exchange traded funds offer top-quality global miners and low fees. Although they will likely remain volatile, they may move up even further over the longer term if inflation or global political and economic instability hurt key currencies, such as the euro or the U.S. Consider investing in mining ETFs-especially for investing in minerals like gold, silver: The overall trend for gold and silver, including the best junior mining stocks, has been to move higher.It’s something you should consider as part of your own portfolio management. That’s also another way of saying that they can be less risky than gold. ![]() That means they potentially have less room to fall if markets in general fall. As well, they’re usually much cheaper than gold stocks in relation to their earnings and cash flow. Aim for a dividend yield: Copper stocks generally have higher dividend yields than gold stocks because they have steadier demand and more stable prices.But most mining stocks also offer an inflation hedge-they rise along with commodity prices and inflation. investing in minerals as a hedge against inflation: Many investors buy mining stocks, including gold stocks, as a hedge against inflation, and some mining stocks pay dividends.Simply put, you can’t move the mine to another country, and local citizens sometimes believe that a foreign mining company is robbing them of their birthright, even though they rely on the foreign company’s capital and expertise to get any value out of the ground. Mining, especially junior mining firms, is inherently a politically vulnerable business that applies to investing in minerals of any kind, from copper to gold. Focus on stable political regions when investing in minerals: For our portfolio management clients, we generally stay away from mining companies, operating in insecure and politically unstable regions such as Venezuela, or in countries with little respect for property rights and the rule of law, like Russia or Mongolia.That cap for investing in minerals is something to keep in mind as your portfolio holdings grow and your sector representation changes. However, resource stocks (and this includes oil and gas, of course, as well as junior mining stocks) should make up only a limited portion of your portfolio-say less than 20% for a conservative investor or as much as 30% for an aggressive investor. Generally, that does not favour jr mining stocks. While jr mining stocks may offer some speculative appeal, we continue to recommend that you (as we do for our portfolio management clients) cut your risk in the volatile resource sector by investing in mining stocks of well-established mining companies with high-quality reserves. ![]()
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