Are Mining Investors Missing Out?
As we write this article we are currently witnessing new highs in gold and silver. Many of the mining stocks have experienced impressive moves in 2005 and continue to do so in 2006. The gold indices; the HUI and XAU are also hitting new highs.
(Of the 13 stocks making up this index, 4 have long-term
(Of the 16 stocks making up this index, 5 have long-term
With many of these mining stocks having long-term warrants trading either in the U.S. or Canada we find virtually no mention thereof, neither in the popular investment newsletters nor comments by analysts. All of the investment newsletters and analyst we follow have at least 2 of their personal stocks picks which have long-term warrants trading. We must ask the question, why do none of them advise their subscribers of this information?
One good reason perhaps is that many of the warrants are Canadian based companies and the warrants have not been registered in the United States for trading. If any recommendations were made the Securities vigilantes would be down on us all. None of us want to deal with these guys so it is only logical that we see no specific recommendations being made on these Canadian warrants.
However, as subscribers, wouldn't it be great to at least see a footnote for each mining company that has long-term warrants trading so that investors can consider for themselves whether to purchase the warrants in lieu of the common shares of a particular company? These warrants on the Canadian mining stocks can be purchased by U.S. investors as the trades are actually executed in the Over-The-Counter market. Symbols are assigned to the warrants as they are to the common shares. Therefore, there is no reason that investors cannot purchase the long-term warrants on their favorite mining companies.
For those investors not familiar with warrants we offer the following brief definition. A warrant is in essence a long-term call option allowing the holder to acquire the underlying common stock at a specific price and expiring on a specific date in the future. Inevitably, the warrant offers considerably more leverage than the common stock. If your favorite mining stock has long-term warrants trading perhaps you should (after consulting with your investment advisor) at least consider the purchase of the warrants in lieu of the common shares.