I Am Always Asked To Give People My One Best Mining Stock Pick

I tell them, there is no such thing, I recommend buying at least ten. I do not know why people are so interested in just owning one. Take the same amount of money you want to invest, split it up and buy a few. There is simply too much risk in owning just one mining stock as any mine can have issues such as flooding, earth movement, political, striking workers, and more.

I remember the Cigar Lake Mine owned by Cameco (NYSE:CCJ). It is a well funded, modern mining operation and one of the largest uranium deposits in the world. This high tech, and high importance mine catastrophically flooded a few years ago seemingly without warning. It took close to ten years before they could get it open again a couple of years ago. Luckily for Cameco, they were a large enough company to survive the cost and get it fixed but many companies would have been bankrupted and your investment would be wiped out.

Another example of the risk is a political one like Tahoe Resources (NYSE:TAHO) is currently experiencing. I once owned it after it bought up one of my old favorites, Lake Shore Gold Corp. (NYSEMKT:LSG). After I looked into Tahoe, I found the company's primary asset was a mine in Guatemala, and although one of the best silver mines in the world, it came with a political situation too risky for me. The stock has recently collapsed in price as Guatemala shut down the mine indefinitely. Glad I sold out of Tahoe at almost triple what the current price is. This is because I was able to take the time to understand the risk, but those situations are not always predictable.

In the mining stock race, you can never just bet on one horse. I like to look for mines in the best areas politically and with a variety of metal output in my portfolio of gold, silver and base metals. Another factor that cannot be ignored, make sure of the management by looking at their experience and track record to see if they are capable and shareholder friendly. Also, do they own the stock themselves and did they buy it with their own money? When they have their own skin in the game, you can bet they will do their best to make the stock a success.

There is also the opposite camp to the just give me one stock pick. They want to own 50 different mining stocks which is just too many to follow. I think the sweet spot number of companies to own for me is from around 10-15. This spreads around the risk, but is still a manageable number to keep abreast of of the inevitable changes that will come. Unfortunately, there is no one best mining stock, but you can own one great portfolio with a nice diversification after doing a little research. I guarantee with a nice portfolio, that you will sleep better at night than they guy who bets it all on just one company.

MOTOWNGOLD!