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+ A Top Performing sector, but not widely followed




- -


+ Gold Miners are a Geared Play on Gold




Makes sense, since at $500, and with $250 Cost: they are levered


- -


+ In Exploration : Capital Gains matter not Cash Flow


Gold gets value on discovery, when still "in the ground"


Thus, discoveries add value YEARS before the gold is produced.

And markets get excited by exploration success.


But small exploration co's burn cash / Like "burning matches"

So risk management of a portfolio is critical.

Don't consider a portfolio of less than 5-6 risky juniors,

And don't start in the middle of a manic surge.


BUY: 5-10% in situ, Hold to 40%, SELL: above 40%


- -


+ Small can be Better, in Exploration


Small Exploration companies...

- can get the job done cheaper,

- they are more nimble and adventurous,

- provide more upside, when a discovery is made,

:: and so, can attract top talent




Large Mining companies...

- have lost many of their best exploration geologists,

- have cut budgets, and JV-ed with smaller co's

- are acquiring smaller companies at the right stage

(some names: Virginia Gold, Viceroy, Nova Gold ...)


- -


+ First $2 million : Canadian IPO's for New Mining Ventures


Costs of going Public:

- China: 2-3 years, and over us$1 million

- Hong kong: hk$10 million = us$1.25 million

- London: pds 400,000 = us$ 700,000

- Canada- venture = maybe c$ 150,000


Every dollar counts, at an early stage

Scandals of the past, have been minimised by new regulatory regime.


- -


+ The Quickest gains are in the Drilling Phase




- -


+ Placements are structured for Profits


In Canada, there is a four month's hold, but...


+ The shares are typically issued at a discount to market (maybe 10-20%), and


+ There are usually "Half Warrants"


Example: Stock is trading at $1.00

.......... : Placement price might be: $0.85, and

.......... : Warrants might be exercisable at: $1.25 (1 to 2 years?): half wts.


If the stock...

Rises to: Holder makes a profit of:

.. $0.85 : Breakeven

.. $1.00 : + 17.6%

.. $1.25 : + 47.5% ............. :: .......... .... ( 1.90 : 1 )

.. $1.50 : + 76.5% + 14.7% = 91.2% .... ( 1.82 : 1 )

.. $2.00 : +135.3% + 44.1% = 179.4% .. ( 1.79 : 1 )


- -


+ Small & Risky Explorer Rule: When it Doubles, sell Half




- -


+ There's Sizzle in Seasonality: Buy in late Summer & Christmas




- -


+ A Dud project is not the End of the Road



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Does this presentation make sense to anyone?


Or does it need the verbal descriptions that go with it?


t-ln: 13.oc: 211


= = =


Diamondfields Resources was one of the most successful Junior Explorers ever.




A book has even been written about it...



Big Score: Robert Friedland, Inco,

and the Voisey's Bay Hustle by Jacquie Mcnish



Edition: Hardcover

Availability: This item is currently unavailable. // 6 used & new from $134.15


Bigger than Life, July 29, 2001

Tremendous read for anybody who has an interest in this sector, or for that matter good business books. Good insights on the tactics used in making a deal for a world class deposit (at least in a seller's market). I started yesterday morning and couldn't put it down all day. My wife did make me walk the dog, and I took a few trips to frig, but was so engrossed I finished it all yesterday. That's saying something because I usually only finish about a fourth of the books I start.



How to turn caribou pasture into a cool $4 billion, March 6, 2006

Reviewer: P. Preston (San Francisco) -


Simply captivating and better written than a Canadian mining story has any right to be.


About how a gang of off-beat penny stock mining promoters (led by Robert Friedland, ex-hippie ... and one time school chum of Steve Jobs) took some of the world's largest mining companies on a dizzying auction for some desolate caribou pasture that just happened to contain some of the richest ore deposits ever discovered.


Bob Friedland is the loadstar of the story: a vain and loathsome character but brilliant as an auctioneer of fear and greed as he escalates the bidding into the stratosphere.


This book contains some valuable lessons for executives and the stock buying public. For executives: have your temperature checked regularly for "deal fever": walk away when the bidding gets too intense, you're probably overpaying. For the public: Beware of (a promoter's) inside tips that (are used) to prop up an overvalued stock - you need a dynamic impressario with a "good story" and some theatrical "props". Brings to mind certain Silicon Valley impressarios....



Fascinating book. A must read., January 11, 1999

Reviewer: A reader

Fascinating book. I knew nothing about Newfouldland/Labrador or penny stocks but the characters, the land and all the business dealings fascinated me. I couldn't believe this was non-fiction. A must read.


@: http://www.amazon.com/gp/product/customer-...155&s=books

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Perhaps you can see why I rarely invest in Gold Bullion or Major Gold miners...


The risk / reward on investing in Juniors has been far better, partly due to the discount-plus-warrants structure of placements. This is particularly true if:


+ You get your timing right (using technical indicators, and seasonality),


+ You do a reasonable job of stock selection (assessing management, and using some tested valuation techniques), and


+ You use reasonable risk control: taking some prudent profits when stocks are over-bought, and not putting all your eggs in too few baskets.


Have I missed any tips, or trading secrets that others on GEI use?

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Here's an investor who has done very well, focusing only on Silver shares:


"I helped my dad make 1000% in four years!

I helped my wife make 500% in two years!


I started out investing my dad's money in 2002. In four years, I grew his portfolio from about $500 thousand to over $5.5 million, for a gain of over 1000%! In 2004, I gave my fiancee $19,000 to hold "in trust". When we got married, it became my wedding gift. By 2006, my wife's portfolio hit a high of $180,000, and stands at $127,000 on September, 2006, which is a gain of 568%. These kinds of gains are no accident, I know what I'm doing and why.


I don't write this to boast, but to tell the truth..."


He does report what he buys, and how much. So his claims are believable


link: http://www.silverstockreport.com/

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Others that specialise in Juniors and early stage companies include:


Canadian : Lawrence Roulston, Ian Gordon, Coffin Brothers ...

Aussies... : Warwick Grigor


...will add more names as I think of them

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  • 3 weeks later...

LOST HERE, i think in the rebooting-- so I will repost these comments from HPC:



"Forgive me - aren't these what are known as 'penny stocks', low value, highly volatile stocks?"

- -


Remember that old saying: "Don't put all you eggs in one basket"?


In a way, I am breaking the rule, by putting so much into one sector; Junior mining & exploration shares.

But that is what I specialise in because:


+ I get more upside- maybe 3-5% move for every 1% move in gold - this way.

.. This happens on the upside, and maybe 2-4% for every 1% on the downside.

.. How is this assymetric relationship possible? see next


+ When I take private placements (which I do often), they normally come with "free" warrants,

.. and this gives me more "upside" without having to pay for it. THus, if a stock is at $1.00, I might

.. take a placement at $0.90 and get hlaf-warrants at $1.20


+ The fundamental story, and the valuation is very important. You have to know how to assess these


+ I typically like to buy a certain type of chart pattern, an A-B-C correction.

.. Here's one on Battle Mtn (BMGX) back in April when I bought it at $0.31:


.. 00a2ba9.gif


.. BMGX is now my largest position. It is a royalty company, as so is arguable safer than a pure explorer


+ I do diversify and spread my investments within the sector. It is very important to have a spread

.. of these small stocks. This risk of a sharp drop is real, and can befall even a stock that you like and

.. have studied- if they have a poor drill result, a cave-in, a political problem, etc.


+ I do my homework, and meet management wherever possible, and before most big investments


+ I take profits when individual stocks shoot up, and invest in undervalued laggards, if they have a fundamental story

.. which might move them


SECRETS of investing in Juniors can be found : here


+ Having said the above, if the bull market in gold stocks ends, this will be a truly dangerous area to invest in.

.. It got slaughtered back in the late 1990's after Bre-X. So i must get out, and into something safer before

.. that happens. I suppose you could say that it staying with this, I am a little like those BTL speculatrs that

.. Kept buying after 2002 or 2003, even though it was obvious most of the easy money had been made


You won't find me in the likes of Barclay's Bank (BARC) except through the options,

and even then, I am getting set to buy bank puts rather than calls


= = =



(Unshure asks):

"Looks to be useful information but how do you buy these stocks? Is it through a broker? Is there a website from which you can buy them and research them? Puzzled."




there are plenty of canadian brokers you can use. I have found it best to open an account in canada.

(like canaccord, haywood,,,)

Some UK brokers will allow you to hold canadian shares, but I'm not sure if they can cope with placements,

-you can ask them.


(Is there a website from which you can buy them and research them?)

Ah, GEI has threads...

But also try: www.Stockhouse.com

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  • 2 weeks later...



The method of the late Julius Baring for investors to evaluate a company against its current share price was described as: “Buy up to 10% of the in situ value of a deposit using current metal prices, hold up to 40% and sell above 40% taking no prisoners!”

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(( From the "Style of Investment" thread )):


What I think...

Is that you are too narrowly focussed on the Gold price.

That may work for you. But I actually find that


The best risk/reward lies in TRADING JUNIORS,

and using the Gold price as a timing tool.


The best moves in the Juniors come when gold is moving up too.

But trading well-selected juniors is much more forgiving.


HERE'S SOMETHING important, that many here ignore, and has been a secret to my own success: taking up private placements in Junior gold miners and explorers may be the lowest risk way of all to trade gold.


Here's why. When you take a PP, you normally get:


+ The stock at a discount to market, often 10-15% cheaper,

+ Free Warrants, normally "half warrants" (ie 500 wts, for every 1,000 shares)


Imagine how it would be, if you decided you want to Go LONG GOLD here at $620, and;


+ You could buy gold at 10% less, that's $558 per ounce, and

+ You got free 1-year call options struck at $680


Do you think you could make money??


Well, it is almost that easy. So why trade gold at all. I rarely do.


Later, I will post a chart of a 7-figure portfolio that I manage,

and you will see the sort of returns that are achievable

@: http://www.greenenergyinvestors.com/index....=1133&st=11

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(from a posting on Advfn, in response to a question there):


"You say u have a large portfolio of juniors. what sort of thing do u look for in the companies you invest in? Are they greenfield, exploration, drilling or near production stage... what sort of mix u have?


dont know much about the business and my investments for now have come through doug casey recs"

= =


MOSTLY, I look to take private placements in Quality companies, at various stages. I meet management, where possible, and even go in mine visits. I will typically ask many questions before i invest. But I will rarely invest unless I like a company's chart - and a A-B-C correction, where the volume is drying up on the C-leg is may preferred chart pattern


Here's a pp I am doing now (name changed to protect the innocent)



Here's an example of one that I waited and waited for, and finally grabbed at $3.34



I dont always get it right.

Here's one I sold for a 10% profit after holding for more than a year.


...I sold below $1.00


Casey is alright, though I suspect he gets his clients in before he writes it up.

Lawrence Rowlston is also good, and there are others on: http://www.KEreport.com , and http://www.HoweStreet.com


If you live near London, you may consider attending the monthly Minesite meetings.

I think Jim Rogers will speak at the next one. They also do daily write-ups.

Link: http://www.Minesite.com

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TM = Tumi . Nice one!

"As a silver explorer, Tumi’s initial focus was Mexico, the world’s biggest silver producer, where Tumi is continuing advanced exploration to expand the historic la Trini mineralization. Research for new silver projects led Tumi to the Bergslagen District of south-central Sweden where Tumi has already made significant acquisitions, including the historic Sala silver mine, making Tumi a major claim holder in the district."




Nice move off the low, with good volume behind it,

and the retracement came on much lighter Volume. Now what can move it??


+ 11/14:

Tumi Resources Ltd. has completed airborne (by helicopter) electromagnetic geophysical surveys over the company's Oster Silvberg, Tomtebo and Vitturn projects in the Bergslagen district of Sweden. The surveys comprised about 500 line kilometres with line spacings of 100 metres and covered a total area of about 50 square km. The surveys complete Tumi's EM program in Sweden for this year, which has also included two ground EM surveys (Sala and Kalvbacken). All data collected from the surveys will be interpreted by the respective geophysical contractors and results will be reported when received.


The NEXT STAGE would be to drill. Have they got any money??


The stockhouse Bullboards have gone VERY quiet

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EPM has $4mn in the bank? If so, the good potential


What i do not like about the chart is th volume spike on the low

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Tumi have $4 million in the bank, 25 million outstanding shares and a market cap of C$12 million.


I was just putting forwad the EPM chart as another suggestion.


Meanwhile, here's another chart which, if I understand you correctly, amptly demonstrates what you look for:



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I wish I could claim those trades!


My buy point may have come just a little later, when it crossed the MA's from the bottom up,

and then stabilise.


I step to sell in stages, and get get more aggressive, as a stock rises on lighter volume-

suggesting the momentum is flagging


= =


Sorry about the confusion on TM. Looks very attractive with those features

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(From the "Questions for Miners" thread, but worthwhile here too):


Talking to Mining, or Exploration companies, I like to ask:


1/ What is the market cap ?

2/ What percentage does management own, and what was their average cost?#

3/ Who are the otehr major shareholders?

4/ what was the price, size and timing of the most recent financing?


(The above will give you a good idea of the strength and motivation of the management and controlling interest.)


5/ What are the major projects? (history, work done, work planned)

6/ What is the valuation?


(Establishing valuation will typically mean, learning about the size of their respources and reserves.

For example, if it is gold: How many ounces? What is the grade? What is the metallurgy?

If not yet in production, will it be an open-pit or underground mine? What is the cash cost,

and, if in development, likely cost of building the mine.


This will help to an idea of how to slant a calculation like: Market Cap per ounce. It is usually not a

good idea to invest in a company that has a Market Cap of more than $10 million, and no resource.)


7/ What are the plans to develop the projects, and what will it cost?

8/ What is the timing of future news?

9/ What are the company's promotional plans?


10/ The background and track record of management and the directors is very important obviously.

The answers to the above questions, will help give you an idea of how to probe further.

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Not a pretty chart


Let's discuss GGG on the Aug.Watchlist thread

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Guest curleyred

Hello: I am a new investor...chose PTU and UPC...Purepoint U. and U. Power Corp. Any news, comments ?Good Luck to all. Tho no oner seems interested in my choices.

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looks like a spam-artist.

these are not mining or exploration co's


anyone who wants to post a company name here, ought to give a sensible

reason, or a chart, as rationale for buying

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On the topic of good reads, suggest keeping an eye out for a book (not yet written) by my stockbroker, a west Aussie. His focus is almost purely small junior Aussie miners, and his book will I expect be a cracker of a read, both in terms of picking junior miners and well as his very sharp humour (his daily morning email to clients is often a reason to get out of bed in the morning alone).


Unfortunately I am not sure when that book will be finalised but am waiting with anticipation.


His previous book, 'The Green Room', was more targetted at the novice investor, but this one should be much more hardcore...but not from a geologic point of view. Just from a 'market savvy' perspective. The 'Green Room' I believe is the barrel of a surfing wave...the trick is to come out the other side still on your board...quite an appropriate analogy for the investor in the small end of the market!


On the topic of 'secrets' of investing in junior miners, here are my key criteria...they are not 'secrets'...just common sense criteria that I personally apply...those that read my Royalco post will have some of these already, but i go into a little more detail here, without the focus on a particular company. I should note that it is rare for many of my investments to fulfil all criteria, since such companies are quite rare, or at least hard to pick out of so much rabble out there at the moment...it was much easier a few years ago when metal prices were in the doldrums...however they are good barometers for picking my investments and generelly the company needs to meet most of them before i touch it.


Note, one i dont cover here is project quality because honestly, that is so obvious a requirement that it doesnt need to be mentioned.


1. Management quality


This is crucial when investing in a junior miner. I mean...a junior miner is a RISK immediately simply by the fact that its a 'junior miner' so the last thing you want his a risk being managed by a bunch of twits. Although i said that some of my investments do not meet all criteria...this is a mandatory one.


Problem is that quality of management is very much a subjective thing...and hard to quantify.


Firstly we need to look at whether the management experience is what is required for the stage of the company.


An explorer should have management with a heavy 'scientific' focus preferably including both 'technical' (ie experiences with technology) and 'boot strapping' (ie good at on the ground work...eg a hard core geologist and a geophysicist. Explorers should also ideally have small boards, for example id be happy with a geologist, geophysicist and a finance guru. Lawyers are not really required at this point in time, unless the explorer is focussed on acquiring 'marginal' tenements.


When a company has a deposit ready for development, it should be readjusting its board to a development focus, ie a mining engineer might replace the geophysicist or geologist. And someone experienced at marketing mining output.


Secondly you need to quantify each of these person's experience...are they the real deal, or a bit green behind the ears, or just a shambles looking to make a quick buck? This involves often getting your hands dirty by looking at their track record, ringing up your contacts (whoever they may be) to see if they've heard of this person and their opinion etc. Association memberships may also provide a key clue, for example a AUSIMM director is often a sign of a well credentialled person.


2. Early Cashflow if not already / tight capital structure


My favourite type of junior miner is one which has both this criteria, and the quality management criteria ticked. The problem with most junior miners is that they are costly to run and money is not easy to come by, particularly those in exploration phase. One could argue that money is a lot more easy to come by in these boom times, but is that a good thing??? Many companies know they can raise capital...so are they being TIGHT and CAREFUL with the cash they have now...ie are they making sure that one drill hole is being used in the right place, rather than 2 simply cos they know they can 'get the cash' when needed.


Too often i see explorers squandering cash on exploration holes that probably were not needed. This is partiularly galling now when mining costs are so high.


By cashflow though i am not referring to raising capital. I am referring to REVENUE. If a junior miner has a potential source of cashflow to fund its other eploration or development projects, that is a BIG tick in my book, becuase it minimises the need for capital raisings.


Cashflow could come from a small mining project that although of minute size, will throw out some decent cash...or from royalties, or from joint venturing into a producing project. Or cashflow could be imminent from again a project that has been on the companies books but just needs a few more ticks eg a feasibility study.


If you can see cash on the horizon then hopefully you have a company that will be able to control its capital structure while continuing to look for the company making projects.


A tight capital structure is almost a mandatory requirement in my books (though i will make exceptions where there is obvious value).


3. Converyor belt strategy


I took this phrase from a presentation by a ASX company i recently witnessed (Icon Resources)...which i think adequately describes one of my criteria, that is, to use and abuse a project as quickly as possible.


So often i see companies hanging onto a project forever, even though initial results were not promising. This is often the sign of a company with poor management or poor projects, ie they have no idea what to do next if they dont keep this one, or they have nothing to move onto or no idea how to find a new project. Of course that dud project then becomes a cash drain.


So a conveyor belt strategy entails quick turnover of esxploration projects...ie poor results mean its flicked off or JVed, while the good stuff is kept for more detailed exploration.


4. Existing resources


Generally my portfolio is mostly made up of companies that have a twin exploration/development focus, that is, they have a resource that they are in feasibility studies or in the process of commissionning, while also being a explorer.


Preferably the existing resource should have extension potential...so that exploration money can be thrown both at high risk projects as well as near-resource areas where the likelihood of good drill results is high, and so a shareprice catalyst. My post on Copperstrike is a good example of a company that meets this criteria.


This used to be a mandatory criteria for me, however due to high metal prices, many of these companies are often highly priced and it is hard to find value, so i have made exceptions where i do find a quality exploration company even without a resource.


5. Makeup of investor base


I try to stick to companies whose investor base are boring people that simply buy and hold...(and hold etc). The last thing i want is to be in a company that is chockers with traders. Companies with a high proportion of loyal shareholders will generally find a great audience for shareholder issues (such as rights issues) without the usual risk of a large selloff just after the ex date...since of course a large loyal shareholder base means its hard for traders to get their piece.


It helps to have large cornerstone institution/company investors on board as well.


IT is often useful to become familiar with large shareholders that appear on many companies registers and who stay there...seeing these people on a register with their 5-10% holding is always comforting.


6. Grade is king...but not in the way you might expect


You've probably heard the phrase 'grade is king' and the speaker is usually implying that the higher the grade the better. I do believe in the phrase, but not in this way.


A low-medium grade project can be a great investment...and in fact can often be a better investment than a high grade one, due to LEVERAGE! It was pleasing to see a seminar recently be Dr Allan Trench where he basically also said the same thing though his angle was more that low grade resources have greater leverage to metal prices due to higher costs which i sort of agree with.


A high grade project may have already been factored into the price, whereas a low-mid grade project, although feasible, may not attract investors until the economics are confirmed, or indeed until production starts.


An example of this occurred today with an ASX listed company called Intec. I bought this a couple of months ago for around 12-14c due to the fact that they had stated they would be producing zinc concentrate (zinc, lead, silver) by Nov/Dec...the price had been pretty low for some time, because the resource ran at only 2.8% zinc. However, it had recently been JVed with Polymetals, a privately run company with strong production experience..and I immediately recognised that if they were involved, then most likely it was going to happen as stated (Poly doesn't get involved with marginal projects). The price slowly moved up but nothing spectacular, even though several announcements stated everything was on track, including wet commissioning of the plant. In fact you could say the price rise was primarily due to the increasing zinc price, rather than progress at the project. By today, the SP was at 23c at open (though it had happened so slowly)...then the ann came out confirming first production...the market went bananas with over 50 mill shares traded (around 10% of total shares on issue) and a price increase of 5.5c. In other words, a low grade project has been fairly much ignored by the market until the very last possible minute.


I'm not saying high grade projects aren't great to invest in...but do not discount low-mid grade projects where the grade is at least sufficient for the type of project it is.


7. Broker likes it


This will only apply if you use a full service broker that specialises in the sector and doesnt just focus on house stocks. If so, then if you trust the persons experience, its a pretty good idea to get them to have a look at it.


Again my broker is a great asset in that regard because even if he doesnt have the technical know how or hasnt looked at the company, he knows people that have and can get an opinion. I am proud to say that in one case, one of my stocks appeared on my brokers recco list after i pushed him for an opinion...and its provided around 400% return to his clients.


My broker has also been around the traps quite a while to know many of the usual suspects who appear on boards of ASX listed companies, and so is a great source of opinion on that subject.


8. Active schedule of exploration/development


This is probably a minor criteria for me as I often invest for long term. However it does help where a junior miner is in a period of intense activity, be it drilling or development. At other times, the market can quite often get bored and the price drifts sideways or gives up gains during that intense activity.


Quarterly reports where they provide a summary of work planned for the next quarter are a great indicator of the likely level of intensity for a company in the near future. Quarterly reports are unfortuantely to often ignored by investors these days...not sure how they work in US, Canada, etc, but in Australia they provide great information from my point of view.


I like to get set in a company before these periods of intense activity start...because often this can mean a decent price rise...and the smart company may also raise cash when it thinks its price has peaked...ie higher price, means less shares, = less dilution for me!


9. Monitor your investment closely


I have a policy that as soon as the wind changes, i jumo out of a company ASAP. By this i mean, as soon as something occurs that causes me to second guess my investment, i will jump ship. This can often cause painful hindsight episodes where the decision to exit was wrong, but on the other hand, it can also avoid sleepless nights. I also take no prisoners when i find another company that I believe may provide a better return than one i already own.


Sometimes i dont follow this diligently, and often regret staying in an investment too long, where i could see things were not as they should be. That actually happened once very recently, where a stock I had held for almost 2 years, and which had around 400% return, looked wrong to me, but i didnt act. I was lucky to exit at my average entry price, as i refused to heed the danger signs...(which included the fact taht the shareprice was gradually retreating).



The above are probably the most important criteria (And approaches i guess) i use...there are probly several others i could talk about, for example, access to infrastructure etc, but i think the above are a good starting point for anyone looking at investing in junior miners. Note the above has come from around 10 years experience, and it did not come easy, not with many heartaches along the way.


Hope some of you find this useful.



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  • 2 weeks later...

"I wouldnt want to jump in and out of the market with some of the relatively small movements we have seen recently"


PERHAPS I SHOULD explain how I do it,

so you can understand how I can make this volatility work for me.


I have a large portfolio of Junior miners and explorers,

with most of them acquired thru private placements, where I generally bought at a discount to market,

and acquired some free warrants at the same time.


My rule is: When it doubles, sell half.

Quite a number if these cheapies do double, and if the upward volume is strong, then i will let them

run before selling down to my "HALF level." Others are less strong, and after the 4 months hold is up,

they may look as though they do not have the momentum to make a double.


In any case, when gold is running, I often have a number of shares trading at/near my target levels,

and so pushes up tend to generate some selling, realising cash for further investments.


THUS, my sales, on the upthrusts in volatility, tend to be sales with nice profits being realised.

I will then sit on the resulting cash for a while, until gold looks ready to finish ist next price dip,

whenever that may be. I then reinvest the cash in other stocks which have interesting stories,

and attractiev charts. I try to buy them when they are at expected inflection points, and are set

to breakout soon.


THUS, my sales on jumps, and buys on dips, ten to be moving money from fully valued junior

miners, into those that still look cheap. The volatility works for me!

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