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Author: Admin | 2025-04-28
These Exchanges is part of the business model for Mining companies. Because a major US listing is out of reach, they settle for an OTC listing as a second choice.While we need to be extra-careful with OTC listings we don't need to rule them out all together. Mixed in with all the chaff is some healthy wheat. As Investors it is up to us to separate one from the other.Private placements and Stock warrantsWhen a Mining company issues new shares Qualified Investors are able to purchase large blocks of those shares at a pre-determined price.These private placements often include Stock warrants as a sweetener for Investors.A warrant allows the Investor to purchase shares of the company at a pre-determined price at some pre-determined time in the future.For example, each share of stock in a private placement could come with a Warrant for a 1/2 share of stock in the future.The Warrant represents opportunity for the Investor if shares of the Mining company can be acquired for less than the current Market price at the time the Warrant becomes exercisable.For the Mining company the Warrant represents a known source of income at some point in the future.As long as the conversion price of the Warrant is below the current Market price of shares, all of the Warrants will be converted to newly-issued shares of stock as soon as they can be exercised.Unless you are a Qualified Investor private placements and Warrants are just something to be aware of. Most of us will never be involved with this aspect of the Financial markets.There is, however, a unique business model in the Mining sector where companies spinout a developing mineral deposit as a new company.Investors in these project-generators may open their brokerage accounts and find shares of the new company along with Warrants for additional shares of that company.Gold BUGS Index Mining stock indexes allow us to monitor the overall state of the sector as part of our Portfolio management process.The oldest indexes are the XAU Philadelphia Gold and Silver Index (1979) and HUI Gold BUGS Index (1996).During the 1999 to 2011 Gold bull Market trend the HUI Index (NYSE Arca Gold BUGS Index) was widely followed by Speculators and Investors.The current mining stock proxy used by most analysts is the GDX Vectors Gold Miners ETF (2006) or GDXJ Vectors Junior Gold Miners ETF (2009).The indexes and proxies also serve as the basis
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