When it comes to trading junior mining stocks, a lot of people think that they are the same as any other equity. Sure they do trade the same as any other hot penny stock out there but the charactarists of them is quite different. There are many things to be aware of. One of these is whether to day trade the stock or swing trade the stock or just hold for the long term.
Firstly, most of these mining stocks are Canadian stocks so you will need to find a penny stock broker who deals in Canadian gold stocks and Canadian mining stocks if you want to buy or trade penny stocks that are in the junior gold sector. Also because a lot of these stocks can be pennies in price a lot of people think that you can make a lot of money. After all a 10 cent stock just has to go to 15 cents and you made 50% on your money. Not bad considering some of these stocks can explode to the upside by the 1000%. That is why a lot of people trade penny mining stocks as a living. But what most fail to be aware of is that a lot of these stocks are very illiquid, meaning, they don't trade very much. It is easy to find a 10 cent stock but when one looks at the trading range over the past year or so you may be see that it has not traded very often. Or the trading volume is slim. Buying a stock that you can't sell or the spread between the bid and ask is wide is a sure way to loose out. For seasoned savvy investors though, buying gold stocks is a just another way to buy gold online.
Secondly, most junior mining stocks are owned by companies that depend on venture capital or private placements to keep them funded. Because they are in the exploration business, they do not have a way to generate any income. They just spend it. They may have mineral property or the rights to certain properties, but as they say in Canada, it could be just moose pasture. Without any good drilling results in the ground or good assays, there is not much to get excited about. Exploration in remote areas of the world is a very costly venture. Litterly millions of dollars can be spent on a maybe or what if. But as history shows so often, when it comes to gold and gold mining in general, people are always willing put out the money and make their bet. Precious metals always holds the fascination and dreams of easy riches and wealth. Mention gold and most investors rich and poor will raise to alertness.
A lot of these companies are kind of like sheep. Meaning they follow one another around. Or so it seems. One company finds a hot spot or new strike and it seems the staking rush is on. In a matter of days all the surrounding properties can be snapped up and staked. You can always see this in the trading activity of the stock with these companies. The one who finds good results, the stock price shoots up. Those who have property around or close by will see some activity in their stock trading to the upside. People have a tendency to chase to rumors. Some refer this to ambulance chasing. People who trade penny stocks refer to this as "Buy the rumor, Sell the news".
Warrants when first issued will have a hold on them for a set period, say 6 months then after that they can be put out for sale to be traded. Each issue of warrants has an expirery date and an exercise price. An example would be a company has a stock price of $1.00. The warrants are say good for 5 years and have an exercise price of $3.00. If the stock reaches say $5.00 before the 5 years is up, these warrants will allow you to buy the above stock for $3.00 thereby giving a two dollar profit. The warrant itself maybe trading by this time for close to $4.00 so if you had bought them for $1.00 you would have gained $3.00 profit whereas with the common stock you would have paid $3.00 and only be up $2.00 at this point.
The above example is one of the pros with warrants. Now with the cons.
Due to the time limit as say the five years comes close the warrants loose there appeal if the stock price is not performing. Let's say the stock price that was $3.00 at the time of issue is now $1.00. Why buy the warrants that have a $1.00 exercise price with little time left when you can buy the common stock with unlimited time.
I would think if the stock had fallen to $1.00 the warrants would be trading for less than .10 cents by this time.
So you will see that there is great leverage both ways. It all depends on the stock, it's sector, and of course time. This is one case where timing is everything.
Below is a list of stocks that offer warrants. A part of that value lies in the fact the sometimes longer time periods are better. I also look into the viability of each company. Remember that trading in warrants does involve risk. Be sure to do your DD on each before trading.
Note. These prices are marked as of Oct. 27 2013.
Agnico-Eagle Mines (AEM.WT.U) - Wt buys sh @ US$47.25 to Dec 2/13.
Armistice Resources (AZ.WT) - Wt buys sh @ $0.35 to Oct 31/14.
Brigus Gold (BRD.WT) - Wt buys 1.3686 sh @ $2.20 to Nov 19/14. (BRD.WT.A) - Wt buys 1 sh @$2.19 to Nov 19/14
Colossus Minerals J (CSI.WT) - Wt buys sh @ $8.50 to Nov 8/16.
Coeur Mining (CDM.WT) - Exercisable on a cashless basis. See TSX Bulletin 2013-0377 for calculation. To Apr 16/17
Crocodile Gold (CRK.WT) - Wt buys sh @ $2.25 to Mar 24/16.
Dundee Precious Metals (DPM.WT.A) - Wt buys sh @ $3.25 to Nov. 20/15.
Elgin Mining (ELG.WT) - Wt buys sh @ $1.30 to May 1/14.
Endeavour Mining (EDV.WT.A) - Wt buys sh @ $2.50 to Feb. 4/14.
Faircourt Gold Income (FGX.WT.B) - Wt to buy Cl A sh @ $9.05 on Mar 31, Jun 30, Sep 30 and Dec 31 to Jun 30/14.
Formation Metals (FCO.WT) - Wt buys sh @ $2 to Mar 10/14.
Franco Nevada (FNV.WT.A) - Wt buys sh @ $75 to Jun 16/17.
Golden Minerals (AUM.WT) - Wt buys sh @ $19 to Feb 20/14.
Gran Colombia Gold (GCM.WT) - Wt buys sh @ $2.60 to Aug 24/15.
Kinross Gold (K.WT.C) - Wt buys sh @ C$32 to Sep 3/13. (K.WT.D) - Wt buys sh @ US$21.30 to Sept 17/14.
Labrador Iron Mines (LIM.WT) - Wt buys sh @ $1.35 to Feb 13/16.
Lipari Energy (LIP.WT) - Wt buys sh @ $4.25 to Mar 11/14.
Luna Gold (LGC.WT ) 5 Wts buy sh @ $3.50 to Sep 29/13.
Lupaka Gold (LPK.WT) - Wt buys sh @ $2.25 to Jun 28/14.
Mega Uranium (MGA.WT.B) - Wt buys 1.11 sh @1.13 to Oct 26/14.
New Gold A (NGD.WT.A) - Wt buys sh @ $15 to June 28/17.
Pilot Gold (PLG.WT) - Wt buys sh @ $2.20 to Oct 31/14.
Premier Royalty (NSR.WT) – Wt buys sh + 0.375 of arrangement Wt at $2 to Oct 7/14.
Primero Mining (P.WT) - Wt buys sh @ $8 to July 20/15.
Rio Novo Gold (RN.WT) - Wt buys sh @ $2.25 to Mar 8/15.
Sandstorm Gold (SSI.WT) - Wt buys 1/5 sh @US$3 to Apr 23/14. (SSI.WT.A) Wt buys 1/5 sh @ US$5 to Oct 19/15. (SSI.WT.B) Wt buys sh @ US$14 to Sep 7/17.
Silver Wheaton US$ (SLW.WT.U) - Wt buys sh @ US$20 to Sep 5/13.
Stornoway Diamond (SWY.WT) - Wt buys sh @ $1.20 to Mar 31/14.
Torex Gold Resources (TXG.WT.A) - Wt buys sh @ $2.65 to Oct 23/13
Trevali Mining (TV.WT) - Wt buys sh @ $1.10 to Nov 10/13.
U.S. Silver (USA.WT) - Wt buys sh @ $0.155 to Jul 26/14.
Veris Gold (VG.WT) – Wt buys sh @ $2.35 to dec 18/16.
Vista Gold (VGZ.WT.U) - Wt buys sh @ US$4, US$4.50 and US$5 to Oct 22/12, Oct 22/13, Oct 22/15 respectively.
TSX Venture Exchange Warrants
Aurcana (AUN.WT) - Wt buys sh @ $1.00 to Dec 1/13.
Brixton Metals (BBB.WT) - Wt buys sh @ $0.25 to Aug 12/13.
Delta Gold (DLT.WT) - Wt buys sh @ $0.17 to Sept 14/17.
Esperanza Resources (EPZ.WT) – Wt buys sh @ $1.80 to May 24/17.
Feronia (FRN.WT) - Wt buys sh @ $0.60 to Sept 8/13. (FRN.WT.A) - Wt buys sh @ $0.30 to Jul 24/14.
Flinders Resources (FDR.WT) – Wt buys sh @ $2.20 to Apr 17/14.
Infinity Minerals (IFN.WT) - Wt buys sh @ $0.20 to Apr 11/13 or $0.30 thereafter to Apr 11/14.
Kilo Goldmines (KGL.WT) - Wt buys sh @ $0.15 to Mar 30/16.
Monarques Resources (MQR.WT) - Wt buys sh @ $0.20 to Dec 14/15.
Noront Resources (NOT.WT) - Wt buys sh @ $4 to Dec 16/14.
Northquest (NQ.WT) - Wt buys sh @ $0.50 to Dec 21/14.
Oceanic Iron Ore (FEO.WT.A) - Wt buys sh @ $0.65 to Nov 30/15. (FEO.WT.B) - Wt buys sh @ $1 to Nov 30/15.
Sarama Resources (SWA.WT) - Wt buys sh @ $1.20 to Nov 2/13.
Sunridge Gold (SGC.WT) – Wt buys sh @ $0.35 to Oct 18/17.
Tembo Gold (TEM.WT) – Wt buys sh @ $1.75 to Dec 29/14.
West African Iron Ore (WAI.WT) - Wt buys sh @ $0.57 to Mar 31/16.
Supplied by TMX Group Inc.