Mining Stocks – Go Outside Just Your Own Borders

by FI Fighter on May 20, 2016

in Lithium, Precious Metals

gundam

When it comes to shopping for mining stocks, over the last year, I have been quite amused to find that so many investors just absolutely refuse to go hunting for stocks outside of their own home country. For instance, many Canadian investors focus strictly on buying stocks listed and trading on the TSX and TSX Venture Exchange. Ditto for their Australian counterparts who won’t look any further than the ASX. As for Americans? I’ve heard this response before — “If it’s not trading on the NYSE, it’s just too damn risky.

Can you believe that kind of statement? Seriously?

The year is 2016.

The internet has now been mainstream for over two decades.

Countries and companies sell their goods and services daily across the globe.

Even when I worked in Silicon Valley, oftentimes, over 2/3 of our workforce was working overseas.

So much for barriers and walls…

 

Which begs to ask, “Why are investors so slow to adapt with the times?

 

Before you criticize and attack me, know that I am a retail investor based in the United States… I’m not pro/anti Canada and I’m not pro/anti Australia. I’m on neutral grounds.

With these stocks, man, I just want you to, “Show me the money!!!

jerry-m

The World is Vast

When I first decided I wanted to invest in mining stocks in 2015, where do you think I turned to? Yup, initially, like just most everyone else, I first restricted myself to only investing in NYSE listed companies… But it sure didn’t take me very long to realize that there were a million other options (many of which were better!) out there as well, and that I would be a total spazz to restrict myself to only a handful of stock selections.

In 2015, my focus was primarily on gold and sliver stocks.

And when it comes to gold and silver, I learned that if you want to go shopping for these stocks, well, you’ve got to hop onboard the TSX, TSX Venture, and ASX. My good mining buddy, The Mining Book Guy taught me that early on, and he even takes things one step further than I currently do, going on the prowl out in London looking for even more gems, via the LSE.

Hey, if you want to get ahead in this world, you’ve got to be open minded right!?!

So, when I realized what other mining enthusiasts were actually doing, I said to myself, “Well, hot damn, I’m obviously a newbie who doesn’t know jack shit about mining… Further, I’m no doubt NOT maximizing my potential gains (which I should be doing) by limiting myself to such few options.

By last September, I had opened up a global trading account (which took, oh, no more than a measly 2-3 business days to setup and fund), and I was good to go!

Don’t Pick and Choose Sides

These days, I’m very much interested in lithium stocks, so just like with gold and silver before it, I’m buying up shares all over the place… So far, my focus has been on Australia and Canada, but if a good NYSE listed name ever emerges, you can be sure I’ll be all over that as well… And just because I don’t currently own any shares on the LSE, no, that doesn’t mean that I never will either…

When it comes to options, I’m totally an open book.

I think life is better (and more enjoyable) that way… Like, when it comes to dating, for instance, I will date a woman of ANY race, ethnicity, religion, blah, blah, blah… If it’s the right fit, it’s the right fit.

Anyway, as you can imagine, I find it so incredibly comical to locate threads on the web where you have investors from Canada only pimping out Canadian stocks… I even read one guy shouting, “The best Australian lithium miner is MacArthur Minerals (MMS.V), so make sure you load up on that name!

Wow, really…

Try telling that to the Aussies, and I’m sure it won’t take long for them to throw the following names back in your face — Pilbara Minerals (PLS.AX), Galaxy Resources (GXY.AX), and Altura Mining (AJM.AX), just to name a few…

Of course, that aforementioned, clueless Canadian investor would probably have no idea about any of the Australian lithium miners since they aren’t listed on the TSX or TSX Venture Exchange… This individual probably thinks that if you want lithium in the Pilbara (Western Australia), MMS.V is indeed the company who holds all the goodies (a simple junior start-up with a few tenements and ZERO drill holes in the ground just yet)!

MMS.V vs. PLS.AX

That’s not exactly a fair fight at this time… Zero resources vs. proven and probable reserves (that are growing by the day for Pilbara Minerals via its Pilgangoora project) that may someday challenge Greenbushes (the world’s finest spodumene deposit) in size. Each company is at such different stages in the mining life cycle that a direct comparison would be asinine to make.

On the flipside, I also hear the following — “Don’t waste your time in Canada. That RB Energy fiasco goes to show that Canadian spodumene isn’t profitable or worth looking at. Stick to Western Australia.

Again, dude, seriously?

What’s with all the generalizations?

RB Energy went bust during the worst part of the mining cycle when all mining stocks across the board (gold, silver, lithium, copper, uranium, lead, zinc, iron, etc.) were all in the toilet and financing/raising capital was near impossible to do… It was an unfortunate consequence, obviously, but just because RB Energy folded, it should NEVER imply that an entire region is altogether worthless, uneconomical, and doomed for dismal failure…

From Nemaska Lithium.

Nemaska RB Energy

Obviously, at this stage of the game, nobody knows if Nemaska Lithium (NMX.V) will ultimately succeed or not… But the RB Energy failure shouldn’t stigmatize all of Quebec… Last time I checked, Quebec was (and still is) a world-class mining jurisdiction that investors are more than happy to pay a big fat premium for (e.g. check out the valuation gap between gold companies operating in Quebec compared to West Africa).

Oh, and with the price of lithium carbonate now exploding in 2016, priced at ~$10,000/t and lithium hydroxide as high as $20,000+/t, my guess is that a lot of these lithium miners can EASILY make their economics work today! Hell, you could probably hire me on as CEO and with such fat, juicy profit margins, even I wouldn’t be able to screw up the project…

To pick and choose sides is silly and a total waste of time (and money)…

For the record, I’m quite bullish on West Africa as well (for both gold and lithium).

Path of Least Resistance

As a retail investor with no noteworthy insider connections in the mining industry or advantages over Joe Six Pack, I’m quite frankly not smart enough to justify isolating myself to a SINGLE jurisdiction, or market exchange.

I’m just your average (my friends would argue below-average) American who is trying to make some money in gold and lithium…

So, open up the whole damn world for me and give me as many options as you can!

When it comes to lithium, yup, I own those awesome Australian companies: PLS.AX, AJM.AX, GXY.AX.

As for Canada? I don’t see why spodumene can’t succeed up there. So, give me shares of: NMX.V, and (***recently divulged to subscribers TOP PICK***)…

 

The world is a big ass place… and there are opportunities everywhere.

To Hong Kong Next

With all that said, i’m going to deviate off course right here and let everyone know that I am super stoked about my upcoming trip to Hong Kong. As a sheltered, uneducated American, I think it’s due time that I finally opened up my eyes and started exploring this vast, beautiful world.

 

I have so much to learn… And I am looking forward to getting massively educated while I’m in Asia…

 

You can be certain, I’m going to investigate into this whole clean energy revolution that much more… In particular, I want to confirm without a shadow of a doubt that the demand coming out of China for lithium-ion batteries is indeed off the charts…

 

Although at this time I remain convinced that the EV revolution will NOT take place front and center stage in the United States, contrary to what some Tesla fanboys might think, there’s only one way to find out for sure… And I will find out.

 

For certain, I don’t think one ought to go through life with blinders on…

{ 7 comments… read them below or add one }

1 MikeNo Gravatar May 20, 2016 at 2:39 pm

Have a good trip FI!

Which brokerage are you using primarily? Any that you like in particular or would recommend?

Reply

2 FI FighterNo Gravatar May 20, 2016 at 5:38 pm

Mike,

Thanks Mike!

As it pertains to global trading accounts, I’ve found that the following Schwab product is probably the easiest bet for US investors to get started.

http://www.schwab.com/public/schwab/investing/accounts_products/accounts/global_trading

Schwab will grant you access to: Canada, Australia, London, Hong Kong, etc.

The fees are sometimes high and you have to call in by phone to place any buy/sell order for these junior penny stocks, but they do have excellent customer service on the global account side of things.

I’ve experimented with Interactive Brokers, and I know people also like Sprott Global, but I think those services are better suited for more sophisticated investors. In other words, those products are more advanced, and probably unnecessary for most folks just starting out (like me). Unless you’re really high net worth (IB charges monthly fee unless your account is over six figures), I think the fees/commissions will be too costly as well.

Hope that helps.

Cheers!

Reply

3 MCNo Gravatar May 20, 2016 at 3:45 pm

What are the differences in buying GXY.AX vs GALXF?

Reply

4 FI FighterNo Gravatar May 20, 2016 at 5:43 pm

MC,

It’s the same company, Galaxy Resources.

GXY.AX is the Australian listing, which is the native exchange for the stock.

GALXF is the OTC listing, which lets US investors purchase shares in US dollars.

For these foreign securities, you can usually buy them on OTC, but in general the OTC markets are less liquid with less volume traded each day… The bid/ask spreads can be very wide and far apart. In many instances, if I’m trying to fill a large order, I’ll have to call in my broker and tell them to make a market for me on the native exchange (TSX, ASX, etc.), which can cost extra (say $50 depending on your broker). Actually, when it comes to buying OTC shares, Schwab One is probably the best experience I’ve had so far. They will auto-route orders and get you the best price possible (whether that’s found on OTC or the native exchange), and you can do that all online (automated) without having to phone in.

In general, I prefer to just purchase the juniors on their native exchanges whenever I can. But then again, I’m the type of investor who likes to diversify across currencies as well (e.g. sell USD when it’s strong to buy CAD and AUD). If you don’t like that approach, stick to OTC and you should probably be fine.

USD, CAD, AUD, gold/silver stocks, lithium stocks, cash flowing real estate, I like them all!

Once the SP 500 corrects itself to undervaluation, I’ll be all up on that once again… Ditto for class A properties.

Time and a place for most everything.

Take care!

Reply

5 mikeNo Gravatar May 21, 2016 at 12:39 am

what are your thoughts on a fed rate hike? Is it a bluff? Mining stocks have taken a huge hit in preparation. What do you think the impact will be? I am not sure myself.

Reply

6 FI FighterNo Gravatar May 21, 2016 at 12:55 am

Mike,

I’m not concerned with any potential rate hikes at all… I strongly believe that gold and silver are the place to be, and this will be the winning trade over the next few years… The US economy is going nowhere fast, if retail performance is any kind of indication of consumer spending and “recovery”: Aeropostale, Gap, Nordstroms, Macy’s, JC Penney, Sports Authority, etc…

I now think the June rate hike is priced into precious metals… Long-term, I’m such a strong believer, I don’t even bother with any kind of short-term noise. If anything, the selloffs like Wednesday are just opening up more buying opportunities.

If I didn’t believe in the gold thesis, I wouldn’t have like 40% of my net worth tied up into it. And if negative interest rates will take hold across the globe (Japan, Europe, etc.) gold will scream.

Cheers!

Reply

7 dannyNo Gravatar May 21, 2016 at 11:58 am

Just came across your blog, interesting read! Was wondering what broker do you use to buy international stocks that are listed on foreign stock exchanges?

Reply

Leave a Comment

 

Previous post:

Next post:

Copyright © 2012 FI Fighter