Selecting Silver Miners For October 2019

Gold and silver are our main focus, no doubt about it. But they are only a part of the precious metals market. Actually, there is another side of the market that could be overlooked by investors starting to look into the precious metals market. So, we would like to take some time to explain how this part is important and why you may be interested in it at all.

Spoiler alert, we are talking about mining stocks. These are the stocks of companies whose main activity is digging gold and silver up from the ground and selling it. It does not take a whole lot of imagination to realize that the profits of these companies are highly dependent on the price of precious metals. After all, if gold and silver become more expensive, then the profits of the mining companies are likely to go up. And so is the share price of such companies. Consequently, if gold and silver go up in value, then mining stocks are likely to go up as well. It’s as simple as that. And the opposite is also true: if precious metals depreciate, then mining stocks are likely to go lower. Mining stocks (or miners, as they are called) are directly related to the price of gold and silver, and this is why they are an important avenue of the market.

OK, so we got that covered. But why exactly would you like to know about that at all? Probably, because you would not want your potential profits to be limited by the magnitude of the move in gold or silver. Your read that right. It is possible to gain more on a move in gold or silver than the move itself. This seems like enough to be interested in this sector, so we will leave out some of the less important reasons.

Now a short explanation of why this is the case. For accounting reasons, when gold or silver move, the move can be magnified by the move in the share price of a given mining company (this could be called “leverage”). Whether it is actually magnified or not is highly dependent on what specific mining stock you are talking about. Some stocks do not even magnify the move but rather limit it. So, it is very important to focus on the ones that boost profits rather than the ones that limit them.

And how would you go about checking which stocks give you leverage relative to precious metals? You could try to calculate some metrics, but which ones really? Fortunately, we have already done this for you and we are keeping these metrics up to date, usually on a daily basis. The tools which give you the necessary information focus on pretty self-explanatory parts of the precious metals market: gold stocks and silver stocks.

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Disclaimer: All essays, research, and information found on the Website represent the analyses and opinions of Mr. Radomski and Sunshine Profits' associates only. As such, it may prove wrong ...

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