As we educate our readers on investing in precious metals mining companies, a common theme in our message is that investors must own/hold a “basket” of these companies. This criterion is based upon several factors. As is the case in many sectors, “high growth” is only available via investing in the smaller mining companies – the “junior miners”. Conversely, while these smaller companies offer vastly superior growth profiles versus the “seniors”, the trade-off is that (naturally) there is increased volatility with these companies, and risk. This “risk” comes in two forms. There is the absolute risk that any particular miner might fail to succeed, and will saddle its investors with long-term losses. The other aspect of risk is with respect to the rate of development of these companies. With their more speculative nature, even the expert analysts in this sector cannot predict with precision the speed with which these companies will develop. Holding a basket of these junior miners addresses both of these categories of risk. Spreading out our investments among more companies, greatly reduces the impact of any one “loser” on our overall performance. Similarly, by spreading out our “bets” among these companies we also address the second form of risk – the amount of time we must wait before the investment potential of a particular company is realized. By holding a number of these companies, we will (hopefully) always manage to pick a few of those miners who manage to excel over the short term... full commentary: http://www.bullionbullscanada.com/index.php?option=com_content&view=article&id=17106:the-bullion-bulls-basket&catid=48:gold-commentary&Itemid=131
