For the last two days, I attended and participated in the Hard Assets Investment Conference in New York City, which was well attended with many great speakers and companies. I always encourage investors to attend these conferences to get a real ‘hands on feel’, after all, it is your money. Meet the management, ask questions, and visit newsletter writers. I would have to say, the consensus was that investors should not expect gold and silver prices to rise for perhaps the next several months and that the markets are still very vulnerable to a decline in gold into the upper 700s. That said, prices are consolidating within the long-term bull market and investors need to exercise patience and continue to seek out excellent companies and deploy their investment dollars as opportunities present themselves.

This is the last of three articles in our mini-series of “How to ’invest’ with….” In our first piece, we asked if the investor with only $5,000 to $10,000 of investment capital was to be left out of this bull market? We provided several ideas for investors to consider.

In our second article, “How to ‘invest’ with $25,000 to $50,000”, we were able to increase our investment choices for investors.

In this last piece, “How to ‘invest’ with $100,000”, once again we expand upon our recommended investment choices, but strongly suggest you read the previous articles for more of our comments.

First, a few overall comments: while the more investment dollars you have to invest in this natural resource sector provides you with more choices and flexibility, this does not necessarily mean you will make more money or have a better return on your investments. In other words, the more dollars you have to invest, you will tend to allocate more funds to conservative positions like physical holdings. Based on our guidance, an investor with limited funds must take more risk, and if we are correct that the junior mining shares and/or their warrants will soar in the coming months and years, then these investors will have the greatest return on their investments. Thus, investors in a position to take on more risk may wish to consider our views in the first article, regardless of the amount of their investments. 

Now let’s get on to suggestions for those investors with $100,000 and more to invest in this natural resource and commodities bull market.

We would suggest that these investors place more investment dollars initially into cash reserves of 20% and increase physical holdings to 30%.

Initially, we would allocate $100,000 as follows:

Cash                                                                                          20%
Bullion – coins or bars in your possession                                   30%
Large-cap mining shares, their long-term warrants,                      20%
       or LEAPS, if warrants are not available
Junior mining shares or their long-term warrants                          30%

The cash reserves of 20% we suggest be deployed over the next several months in the junior mining or their long-term warrants, many of which have remaining lives of over three years.

Our opinion, as well as that of numerous newsletter writers and analysts, is that silver will outperform gold, and thus we would suggest your physical holdings be in silver coins, bars, 10 oz. and 100 oz.

Building on the previous articles, we would suggest you be ”fully invested” no later than August or early September with a final portfolio allocation of:

Physical holdings – bullion                                                  30%
Large-cap mining shares, warrants, or LEAPS                   20%
Junior mining shares or their long-term warrants                50%

As we stated in the previous articles, the junior mining shares as a group have greatly underperformed, and we expect a major rally in the coming months; thus, we want a significant amount invested in the shares, warrants, or LEAPS of at least eight or 10 of these companies.

Again, it is essential for readers to have a brief overview and understanding of options, LEAPS, and warrants, the use of which can greatly increase your investment returns, so here is some good basic information.

Options and LEAPS trade on the Chicago Board Option Exchange (CBOE). They are a contract giving you, the investor, the right, but not the obligation, to purchase the underlying security at a specific price and expiring on a specific date in the future. Call options may have a life of 30 days to one year, while LEAPS may have a life of up to two years. Your loss is limited to your investment for these contracts and no margin is used. The potential gains are great, if you are correct in your timing and company selection.

Warrants are slightly different in that warrants trade like a stock and are issued by a company usually in an initial public offering or in a financing arrangement. Many sophisticated investors are not aware that there are many warrants trading. While it is very common for warrants to be issued in private placements, particularly in the mining sector, these warrants do not trade and thus cannot be purchased. What is of particular interest is there are numerous warrants trading that have a remaining life of three years or more.

Think about the possibility of a long-term warrant on one of your favorite resource companies with several years of time remaining, which is why we consider long-term warrants to be an investment not speculation.

Warrants will provide you with the opportunity to participate in this bull market with time on your side, a much lower cost than purchasing the common shares and the power of leverage working for you. As with options and LEAPS, your potential loss with warrants is limited to your cost and there is no margin.

In summary, investors with limited resources to invest can have a stake in this bull market and the opportunity for incredible gains by considering the use of options, LEAPS, and warrants. Actually, I have recently purchased some call options on a large silver company that did not have warrants trading. I am investor first and seek out the best opportunities, whether that is acquiring the common shares, options, LEAPS, or warrants.

For subscribers to our service, we provide a table of all resource companies with options, LEAPS, and warrants that are currently available, to assist you with making your investment decisions.

We invite you to visit our website, view and listen to our new video tutorials, spend some time in learning center, and sign up for our free Monday email, The Warrant Report.

Dudley Pierce Baker
Guadalajara/Ajijic, Mexico
Email: info@preciousmetalswarrants.com
Website: PreciousMetalsWarrants