Categories: Precious Metals
Topics: General Precious Metals

How to Pick the Best Gold Stocks

May 13, 2016

In The Intelligent Investor — one of the most important books ever written on the subject of investing and speculating — Benjamin Graham explains that all stocks are subject to wide fluctuations in price...

And that the intelligent investor should be interested in the possibility of profiting from these pendulum swings.

He goes on to explain that there are two possible ways to do this: timing and pricing.

The pricing method requires buying stocks below their fair value and selling them when they rise above such value.

The timing method involves buying the stock in anticipation of an upward move in the stock. 

In order to do either successfully you have to be very clear about the type of investor you are and you have to ask the right questions.

In a sector as risky as the junior resource sector those questions are critical. 

What’s fair value for a junior mining company with excellent management, but without a real asset hoping to discover something?

How do you make sense of 20% price swings in either direction on a day without company news?

Do you sell and cut your losses? Do you buy more and average down?

For the past five years I’ve been preaching caution — and there’s still some caution to be had — in the precious metals markets.

But there is a bottoming process occurring that has brought excitement back into junior mining stocks... and all that comes with it.

What comes with it is projects that weren’t successful in the past and won’t be successful during this next leg-up being repackaged to be sold to retail investors.

The good news is there are enough companies out there that are being managed by good people who know how to do good work and have built up their portfolios during the latest bear market.

Click this link to continue reading on Outsider Club, where this article was originally published.