How to Invest in Gold and Silver Stocks

If you are new to the precious metals markets you may not be aware of the opportunities present with mining companies and their historical behavior in relationship to a secular bull market in precious metals. This article will provide a handy perspective and opportunities in this arena.

Things You'll Need

• Internet connect or
• Brokerage account to phone in orders

Instructions

1. Mining company stocks during a precious metals bull market have traditionally risen in value a much larger per cent than the actual price of the metals they mine. Of course many large mining companies extract a variety of metals from their mines. It is rare to find a mining company that only mines silver for instance. Silver is usually mined as a by-product in a mine whose primary target is copper, gold or another raw material.

2. When doing research on a potential mining company, aside from the financial statement, it is important to find out what their "proven reserves" are of the various items mined. Proven reserves indicate how many ounces (or tons) are present in a given mine. Also important to know is the cost per ounce to extract the metal from the ground. These two main items give you information that is invaluable when looking to make an investment.

3. Let's say it costs a company $400.00 in labor, materials and expenses to extract 1 ounce of gold. And suppose this same mine has proven reserves of 300 million ounces. From this information along with the current spot price for gold (approx.$900.00 per ounce) you can surmise the profitability of the overall operation. How much gold they can actually extract in a year will give you a good estimate of potential earnings. Going to the web site of a mining company and reading through their financial statement will provide you with all the info I have mentioned here.

4. What companies are good to invest in? I will list several companies that have good proven reserves, have been managed well, own or operate mines in countries where strikes or civil unrest are minimal and have a good track record. I urge you to do a bit of research on each or any of these recommendations before making a purchase. Yamaha Gold (auy), Newmont Mining Co. (nem), Gold Corp (GG), Kinross Gold (KGC), for silver mining companies; Pan American Silver (PAAS) and Coeur d Alene (CDE). All of these stocks are trading below their 1 year highs but clearly headed up.

Tips & Warnings

• Summertime is generally a subdued marketplace for precious metals and related stocks

• The 3rd and especially the 4th quarters each year is usually the time for metals and metals stocks to rise.

• Past performance does not guarantee future results

• Do some homework! Get to know a company you are interested in