Thinking About Investing in Metal Mining… Hold That Thought
While investing in metal mining is considered a job for big venture capitalist who have the money, resources and experience to dive into this, you should know that it’s possible for you to invest in metal mining too. Though you may not have the capital to open up you own quarry and try processing or hire a derrick to extract diamonds, you may be interested in stocks in metal mining companies listed on markets globally. Or better yet buy bonds in mining sector. Some have gone to the extreme to buy property in area prospected for a major metal mineral find. So how do you decide to take on such a venture despite the obvious risk involved?
According to a yearly report by the investment firm Ernst and Young Global the top risks in investing in metal mineral mining include;
- The price fluctuations with instances of massive drops as witnessed between 2005 to 2011 leading cost cutting measure by most mining operation to be able to sustain growth.
- Capital allocation and access is also highlighted as major hindering factor to investing in metal and mining. And as they become volatile, they become less lucrative as venture for bullish venture capitalist.
- Licensing and regulatory issues developed by governments due to concern over environmental and nationalism issues. Socioeconomic issues that erupt around metal and mining leads to delay or stopped development plans for mines.
However you can make a pretty penny if you go in the right way;
- As a prospective investor you should look out for metal and mineral venture that have solid projection of the future. Avoid speculators who think they can make, it’s a very murky industry that needs a level of certainty to make it worthwhile.
- Also consider putting your money in industry with long term partnership serving and providing tools for mining and metal extraction. When the cookie crumbles they always able to turn around as witnessed before.
- Finally, also think about going to private equity funds that have ample investment to risk putting their money in mining an metal extraction venture because they have a pool of resource to bounce back if the venture goes belly up.