In the past three years, gold has nearly doubled in price, and exploration for gold and silver, long neglected for most of the past 20 years is again springing to life. Geologists are studying maps and flying off to check out neglected gold deposits all over the world. Smaller, junior mining exploration firms are out sampling, trenching and drilling their properties. In Nevada , it’s hard to get a knowledgeable and well qualified drill crew to come out with their rig and drill your property – there is a waiting list. Almost as soon as the drill samples are collected, they are whisked off to be analyzed and not long afterward the mining and exploration companies are reporting their results.
The stock price a successful exploration company with a new find may increase 4 fold and more in a matter of a few weeks. Spectacular gains for certain select mining stock prices has happened a number of times in recent years. With the strong price of gold and silver, and the potential for significant gains, many investors are seriously considering mining and exploration company stocks for inclusion in their portfolio. The question becomes, however which companies should be selected for investment? Unfortunately, the geologic information in the press releases they offer can be confusing and their interpretation difficult. So how is the investor to sort through and interpret all these reports with their technical information such as geologic maps and sections when they are offered to the investing public?
Before investing in a company, be sure to do your homework and find out everything you can about the company you are interested in. Press releases are a common source for information, but be sure to also look at the company websites. Many companies will have a copy of the report they made at the last stock holders meeting and this will often have much more detailed information than is offered in simple press releases.
Both exploration and mining are risky businesses – There is a great potential for gains, but also great potential risk of loss. Consider all the sources of information you can get and before you invest in an exploration company, study up and see what the potential really is. Know and understand the potential risks and don’t take on more risk than you can reasonably afford. Be sure not to put all your eggs in one basket – it is a sound strategy to diversify and invest in a number of companies in a variety of industries. Take the time to learn about the mining industry in general – how it works, the processes used, etc. before you jump in and invest. Taking a raw property from moose pasture to productive mine is far more difficult than it may appear.
The author is an independent investor and not a consultant, advisor or broker. Information in this article is presented for educational purposes, and it is not intended to be used as investment advice. The reader is strongly urged to fully identify and consider all the risks before making any investment.
For more information on investing in mining company stocks, check out the authors web page on Mining Company stocks at:
Chris Ralph writes a monthly series of articles on small scale mining and prospecting for the ICMJ Mining Journal. He has a degree in Mining Engineering from the Mackay School of Mines in Reno and markets his own line of gemstones and jewelry. His web home page can be viewed at: http://nevada-outback-gems.com
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