Diversify or perish. I think this is a quote from HG Wells.
Okay, okay, I know it’s actually “adapting or dying”. But if H. G. Wells was guided by investment rather than words, I would bet he would have corrected that quote to my version.
In fact, you’ve probably heard of this golden nugget of investment wisdom. This is something that every investor should be familiar with, because it is the key to successful investing.
Simple and easy: never put all your investment eggs in one basket. If the market falls out from under that basket, your egg will crack and spill your savings on the floor.
This is simple advice, I know. We can say that diversification is a smart route, but what exactly should be diversified?
I have one answer to this question today: metal companies.
Every investor should have a little contact with miners – especially small-cap miners, if you like to capture the fast jumps that most Wall Street tends to miss.
It just gives you access to above-average stock price volatility. Especially today.
Now many of you may say, “But isn’t it risky?”
It can be absolutely. Any sector in which there is constant volatility (such as crypto-assets) can be a bit risky, but much of that risk is managed by having a plan. This protects you from abrupt movements or holding back investments longer than necessary.
You just need the right strategy. And if you don’t have it, I’d say you should start looking for it now because the focus of the mining industry is when the commodity market recovers.
According to a PwC report released last year, 2016 saw a turning point in the mining industry. The 40 largest mining companies earned total net profits of $ 20 billion, well above the $ 28 billion loss in 2015. Meanwhile, their score rose in 2017. .
In fact, the market capitalization of these 40 companies grew by 45% in 2016 to $ 714 billion.
And the good news for the miners continues.
Take, for example, gold. Miners are particularly sensitive to rising gold prices right now. As gold continues to grow (and will), gold reserves will grow.
It’s time to go long in this area.
In fact, since the beginning of December, the VanEck Vectors Junior Gold Miners ETF (NYSE: GDXJ) has been moving away from the support line for about $ 30. Now it has grown by about 14.8%, this is a good rally that could break through if it breaks current levels.
All of this means that if you want to diversify more, a miner is a great bet.