How To Invest in the Precious Metals Market

August 30, 2006 | By | Reply More

The most straightforward route into investing in the precious metals market is to buy shares in mining companies.

Dependent upon the investors’ attitude, to risk putting money into mining stocks can cover virtually the whole spectrum from reasonably low risk to the most speculative of investments.

Bear in mind that in most cases, established mining companies will operate several mines extracting a principal metal and, as a by product, one or often more metals.

These major miners may have as their principle source of revenue a base metal such as copper or lead with gold silver and/or platinum contributing a lesser proportion to total turnover.

It should also be understood that these proportions will vary, often very considerably, dependent upon demand and price for the various metals produced.

At the other end of the investment spectrum are the penny mining shares

As long as people have been investing in shares there has been a very dubious market in stocks of that have never produced or were never intended to produce.

This is not to say that all were only pushed to part naïve investors from their money but to this day there are still some scams around in this market.

It is just too easy to produce a convincing prospectus with data about ore samples, expected production etc of which the average person has no technical knowledge and no means of verifying the claims.

If you join the ranks of investigative investors you will no doubt be accessing the web for information and if so you will soon be receiving unsolicited emails recommending that you purchase shares immediately in this or that unheard of company, often miners, as they are just about to announce a major break through or hit a rich seam or similar reason which is going to send the price soaring.

This is known as share pushing and please do not be taken in, we have never known any body but the pushers making money.

You have been warned!


Having said that, a lot of money can be made, or lost, by picking penny miners that stand up to a rigorous check of their credentials, including the background of the companys’ officers, balance sheet etc.

Also consider the location of the mine or mines

  • e.g. are they in politically sensitive countries? There is no substitute for research whether it is a major mining company or a penny stock.

The cheapest, easiest and fastest way to invest in stocks and shares is through an on line brokerage account.

They offer the lowest commissions, fastest executions of orders with platforms that show tic-by-tic movements of your potential investments. There are usually areas that can be accessed to give the latest company news, principle figures from the latest balance sheets and other relevant information.

If there is a downside, it is that, unlike traditional stockbrokers, who you can talk to about your investments and have their views and advice, you will have to rely on your own judgement in formulating your own investment strategy and make your decisions to buy, sell or hold without help.

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Category: Stocks and Shares

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