Investing in stocks that do mining and exploration for different commodities can be an exciting venture. The goal is to make an investment in a company poised to discover a huge deposit of gold, diamonds, silver, platinum, or other commodity. These stocks are traded on the major stock markets in the U.S. and abroad — they’re also usually dividend stocks.
There are different types of mining stocks from which an investor can choose, providing a feasible investment opportunity for almost any budget. Penny stocks trade for a price of five dollars or less per share, making them quite a bargain. However, they also tend to be very risky because they may represent a poorly performing company, so an investor should conduct research before sinking any money into them. Losing money is just as bad as debt when it comes to financial planning.
Junior mining stocks represent small companies that are just beginning to explore deposits in different areas of the world. Making an investment in one of these is more speculative than investing in a larger, established company. If they are successful, these companies will offer high returns on investment, but there is a much higher risk that they will fail than will mining companies who have already found a deposit.
The best time to purchase a mining stock is shortly before the company drills a discovery hole. This can be like finding a needle in a haystack because reports claim that more than 600 locations must be drilled before one ore deposit is found and converted into a mine. Exploratory drilling usually increases when the prices of precious metals are high because there is extra money to spend on the process.
Most of the legitimate discoveries can be identified by their tendency to continue sinking money into the mine when the price of metals declines. Those who are looking for a safe investment should purchase shares of well-established mining companies. Individuals who can tolerate more risk may want to explore junior mining company and penny stocks.
Don’t forget to check out my mining news website — it covers all the above information, plus some.