Aside from owning physical gold, silver and platinum, investors can also make gains through the ownership of mining stocks. However, given the fact that there are more than 2000 such equities listed on the stock exchange, choosing the best among them takes a keen eye.

Things To Look For When Evaluating A Mining Company

There are a number of things you’ll want to look for when selecting a mining company. The first is a management team that is exceptional in quality with a long and profitable track record. Be wary of mining companies which were recently launched. If a firm hasn’t been in business for at least ten years, investing in it could be risky, because even if they’ve found a rich deposit, poor management can screw it up. Second, their assets should always be situated in the +SWAP Line countries.

A great management team will control lots of capital, both physical and intellectual. This will enable them to address any challenges that arise in a manner which will lead to greater upside with reduced risk. In the past, most experienced investors avoided “AK-47 countries.” These are places where average citizens need to keep an AK in order to feel safe, both at home and while traveling. Countries which have access to SWAP lines that are dollar denominated  usually get better treatment and agreements related to trade when compared to nations that do not have USD SWAP lines. This is a trend which is expected to continue into the foreseeable future.

The Sniper Technique

Anyone who is serious about investing in mining stocks must be prepared to do their due diligence, and the best way to achieve this is through the sniper technique. Essentially, you must spend hours (thousands) doing online research and even visiting physical sites if you’re able to so that you can speak with the experts in person. Mining stocks are extremely volatile, and a company which is profitable today can run into problems tomorrow, problems so severe that its operations can be disrupted or halted indefinitely.

While mining companies situated in AK-47 countries offer the opportunity for spectacular profits, they also come with steep geopolitical risks. For instance, if there is a military coup, the new regime could be hostile to foreigners and even a profitable mining company could be at risk.

The Gold Silver Ratio

Those that are interested in investing in silver or gold mines should familiarize themselves with the gold/silver ratio. Right now, the ratio is the largest it has ever been, but many experts believe this ratio will contract in the near future. Silver is a metal used for industrial purposes but there actually isn’t much primary silver mining going on right now.

Most of the silver which is available on the market today is actually a byproduct of gold mining. While some investors have stated that they do not think silver will do as well as gold because of the slowing global economy, others dispute this since silver is much more affordable than gold yet serves the same role as an inflationary hedge.