Mining Stocks – Large Caps Are NOT Always “Safer” (July 6, 2017)

When you talk to people who know next to nothing about junior mining stocks, they will typically scoff at you when they learn that you’re buying a bunch of “risky ass penny stocks”… The most common snide remark I hear is, “If you’re so brave, why don’t you just take your money, go to Vegas, and bet it all on black?

To take it a step even further, the overwhelming belief out there among the masses is don’t invest in mining stocks at all… But if for some reason you’re insane (and stubborn) enough to do so anyway, you’re much better off allocating most/all of your funds into large cap major producers and not into any “super risky and speculative” juniors…

Well, as today’s price action in Tahoe Resources (TAHO) should CLEARLY illustrate, the above sweeping generalizations made by your typical generalist don’t always hold true.

So much for “safe and secure”.

I bring up today’s debacle not to rip on large caps, but seriously, when it comes to mining stocks as a whole, the ENTIRE universe is beyond belief volatile and risky!

It’s not like one camp is all that much better than the other… They all have their pros/cons… And blow-ups happen routinely in this sector; the Game of Rocks ain’t easy for nobody!

But like everything in life, you have to dive into the details to really figure out on a relative basis which companies are riskier bets than their peers.

And using market cap/share price alone as your indicator will NOT tell you jack shit about risk!!

In regards to TAHO, I used to own shares (I acquired them via the Lake Shore Gold takeover in early 2016), but I cashed out of my position last September (ironically enough to secure funds to invest in one of those aforementioned early-stage junior explorers).

At the beginning of this year, I was in the market for a silver play and did look at TAHO on a comparative basis to its peer group.

Here were my conclusions, made back in February.

TAHO has had a lot of issues in the past with the local communities in the regions in which they operate their mines, and I honestly can’t say I have a competent grasp on whether or not these disputes have been resolved or will be an ongoing struggle moving forward

Bottom line, I just wanted to place my money with a mining team that I think will be a prudent steward of capital… Yes, I think silver will outperform and head higher this year… In the process, I just want to make some money… and even more importantly, not lose a ton of it on a speculative bet… That’s my main reason for going with FSM… Sometimes, there’s more to picking out these stocks than just going with the best assets and technicals…

People matter a lot… and it might be the most important criteria of them all.


Obviously, I was totally wrong with my bullish silver stance (I was thinking we would hit $20/oz silver sooner rather than later), and the silver idea I went with, Fortuna Silver (FSM), hasn’t exactly performed all that well either (yes, I was an idiot for buying aggressively in February, sigh), but that article explains why I ultimately decided not to invest in TAHO, even though on the surface it looked to be a killer buy…


Anyway, this whole mining game is beyond tough…


So, if you’re gonna dabble in the space, don’t park all your capital into just 1-2 ideas… You seriously have to diversify b/c you just never ever know for sure with ANY of these stocks… Senior producers, large cap producers, developers, early-stage explorers, etc. it’s all one and the same…


Tough, tough, tough.


Happy Hunting!

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