Things that are awful about mining investments? The same things that are wrong with any other investment and more. Just kidding ... but not really.
Too many junior exploration companies print shares like Bernanke prints USDs
Management is more often than not lying/clueless(take your pick) about target dates for reports and results
Mines take a significant amount of time to build which is indeed one major pitfall as investors get bored and cycle in and out
Hand in hand with the point above, the amount of definition drilling and planning it takes to put a mine together is not cheap or quick
It is not difficult to make drill results appear better than they are which dilutes the economics of extraction greatly
CAPEX can be quite significant resulting in dilution
With all the potential cons of investing in mining companies, what are the pros?
You're investing in a hard asset that has real-world use and value and is, as no commodity is 100% recycled, declining in potential supply by the day
Commodities typically(except in the case of certain exotics like REEs and others) have a spot market price at which mining company can sell them and know it's getting a reasonably fair price
Mining can be incredibly lucrative, even more so if you believe in the continued bull market in hard asset prices
Mining exploration stocks often trade at large discounts to their potential cash flow - if you ride a potential mine into production you will often see what I believe to be the safest and most risk-reduced gains
Stocks can move significantly on a number of catalysts which can often be predictable such as the timing of a report that the market is not factoring in
Mining industries can be self-regulating whereby low commodity prices cause mines to shutdown which causes supply constraint and thus higher prices
Hundreds of companies(exploration and producers) to compare and contrast
While every area of investing has pros and cons, I believe a focus on mining offers an excellent risk/reward for those who take the time to learn a bit about the industry as there are not many which offer the micro-cap investor the ability to survey so many companies across the same spectrum and have their pick of the litter.
Troylando Bullish on $TWDL
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