$5,000 to $10,000 may not go far in buying the top companies on the NYSE or the Toronto Stock Exchange, but in the junior mining sector, you will be amazed what you can accomplish. You can actually buy thousands and thousands of shares. Yes, these are ‘penny stocks’ but the challenge is to uncover those companies which have the potential to perform well in the coming months. The risk is incredibly high but so is the potential reward. [Let me explain.] Words: 538
So writes Dudley Pierce Baker (www.JuniorMiningResources.com ) in edited excerpts from his original article* entitled Junior Mining Investing with $5,000 to $10,000.
This article is presented compliments of www.FinancialArticleSummariesToday.com (A site for sore eyes and inquisitive minds) and www.munKNEE.com (Your Key to Making Money!) and may have been edited ([ ]), abridged (…) and/or reformatted (some sub-titles and bold/italics emphases) for the sake of clarity and brevity to ensure a fast and easy read. The author’s views and conclusions are unaltered and no personal comments have been included to maintain the integrity of the original article. Please note that this paragraph must be included in any article re-posting to avoid copyright infringement.
Baker goes on to say, in part:
We have seen some recent studies that of the shares trading on the TSX and the TSX Venture Exchange, approximately 42% are trading at less than $0.10 and another 20% are trading between $0.11 and $0.19….[That being the case,]…investors have an opportunity to get started investing in this sector with a small amount of money.
Yes, these are ‘penny stocks’ and the challenge is to uncover those companies which have the potential to perform well in the coming months. The risk is incredibly high but so is the potential reward.
There are some great junior mining opportunities buried in those 2,000 companies which have some cash, great properties and good management but of course the ultimate challenge is discovering the special opportunities which have the potential to make you a lot of money, possible, 500%, 1,000% or more. This can definitely be accomplished with some research, attending conferences or following some of the top newsletters in this sector….
We could write volumes on how to find these opportunities but for now we would like to tell you how to invest in these shares once you have found them and [with] as little as $5,000 to $10,000.
First, we would spread these monies over a minimum of 4 to 6 companies. With $5,000 we would look to buy 4 positions in the junior mining sector and with $10,000 we would spread the money over 6 positions to possibly include two additional companies selling at higher prices and perhaps with current production thus giving investors more opportunities as well as more risk diversification.
For example with $5,000:
- silver company “A” selling at $0.05 – buy 25,000 shares $1,250
- silver company “B” selling at $0.50 – buy 2,000 shares $1,000
- gold company “C” selling at $0.06 – buy 25,000 shares $1,500
- gold company “D” selling at $0.30 – buy 4,000 shares $1,200
For example with $10,000:
- silver company “A” selling at $0.05 – buy 30,000 shares $1,500
- silver company “B” selling at $0.50 – buy 3,000 shares $1,500
- gold company “C” selling at $0.06 – buy 30,000 shares $1,800
- gold company “D” selling at $0.30 – buy 5,000 shares $1,500
- silver company “E” selling at $1.00 – buy 2,000 shares $2,000
- gold company “F” selling at $0.75 – buy 2,000 shares $1,500
As you can see [from the above] we suggest you accumulate a basket of shares each of which has the potential to make you substantial gains but with the full awareness that not all of these position may work out. If only a few shares perform well you can still make a significant amount of money on these investments.
The [current] timing is perfect for all investors to get started in the resource sector. Most of the shares are trading at historic lows and most newsletters and analysts are expecting a banner 2013 for gold, silver and the shares. It’s time for you to get in the game.
The timing of this article may seem incongruous given the current weak performance of gold and gold stocks but that was the identical situation in each of the past manias – both the metal and the equities didn’t excel until the frenzy kicked in. The following documentation (exact returns from specific companies during this era are identified) is actually a fresh reminder of why we think you should hold on to your positions – or start accumulating them, if you haven’t already. (Words: 1987; Tables: 7)
The GDX has declined 19% in the past 12 months, 15% during the past 3 months, 4.6% in the past month and has traded in a narrow flat channel for the past few days. That being said, could be that it is time to hold your nose and buy in before it makes its expected move that will turn the present stench into that of perfume.
Forecasts are only a guide or a potential road-map as no one can predict the future but we can assess risk, reward and probabilities. [Given that,] we think that the current probabilities favor a secondary bottom in gold stocks and that, very soon, the risk/reward dynamic will be heavily in favor of longs. [I explain and illustrate my conclusions below.] Words: 484; Charts: 2; Tables: 1
What is developing in the markets is not the beginning of another leg down in gold, but a second chance to get positioned for what should be a very profitable intermediate degree rally over the next 2-3 months. [Let me explain further with a number of charts to support my position.] Words: 460
The prospects look great for Gold and Silver to move sharply higher into 2013 to mimic the moves made in the 2005/ 2006 period and especially in 1979. In both cases back then the PM Stock Indices made big runs along with Gold and Silver. As such, the current HUI looks good for a major bottom to now be in place and to mimic the PM Stock Surrogate chart from the late 70’s. This would see the HUI go as high as the 1000 area in 2013. Let me explain further. Words: 640
For the past eighteen months, gold stocks have been pummeled…What’s going to move these darn stocks? Will their day ever come? Could our research – gulp – be wrong? Jokes have even started circulating…[such as] a) What’s the difference between a seagull and a gold stock investor? The seagull can still make a deposit on a Mercedes. b) Gold equities may be bad, but I slept like a baby last night. I woke up every hour and cried. Laugh or cry, however, underneath this heap of stock-certificate debris is the contrarian opportunity of a lifetime. That’s a strong statement, I know, but below I present numerous well-researched reasons why I’m convinced gold stocks are one spark away from igniting the portfolios of those with the cash to buy, courage to act, and patience to hold. Words: 2800
We’ve been surprised at the recent action in the precious metals complex. During the recent correction the shares were showing quite a bit more strength than the metals. Then the shares took a dive below support yet the metals maintained their recent lows! How do we interpret this wild volatility in the relationship between the shares and the metals? Quite often we look at daily and weekly charts. Now is the time to take a look at the monthly charts which can help us get a better read on the larger trends at hand. Words: 636
The best way to look at miners, in relation to gold, is to look at the relative strength of each which is most clearly illustrated through ratio analysis. Whether you are a fundamental or technical analyst, both schools of thought support the notion of investing in sectors that exhibit positive relative strength. For those unfamiliar, the idea is that relative strength tends to persist over time and that it is often best to invest in securities that exhibit positive relative strength. [So what does relative strength analysis suggest is the appropriate course of action these days? Let’s take a look.] Words: 805
You have probably read in multiple articles that mining stocks offer leverage to the movement of the underlying metal. This hasn’t been the case over the past several years, however, which has created some confusion in the precious metals investment community. While the gold price has more than doubled (+110%) in the past five years, the AMEX Gold Bugs Index (HUI) is up only 15% so why do people keep saying that mining stocks offer leverage? Well, because they do during certain periods of the bull market. [Let me explain the situation more fully and exactly where we are in the current bull market.] Words: 677
The leverage of gold mining shares over the price performance of gold itself and the added leverage of the warrants of such companies over the stock price performance supports the possibility of amazing gains for the right warrants of the right junior miners. Words: 1106