Flight to Safety: Junior Mining Stocks

It’s not all bad news in the markets at the moment…

The traditional playground for speculators, junior mining stocks, have held up surprisingly well over the last few weeks.

There are a few examples of this in our speculative portfolio, such as Aldebaran Resources [TSX: ALDE].

This company has steadily ascended throughout November, despite the global market sell-off.

Now, compare that to a giant blue-chip stock like the Commonwealth Bank of Australia [ASX: CBA], which continues to post new lows.

Over the last six months, our copper junior has increased by over 100%.

Meanwhile, CBA is down almost 20% since July!

Risk is in the eye of the beholder…

Sure, junior mining stocks are risky.

However, you need to consider that they’re coming off a very low base, unlike index-hugging blue chips such as CBA.

That’s one reason why I believe junior miners are holding up relatively well in this recent market sell-off.

But that doesn’t mean you can buy any small-cap miner.

There’s still a need to focus on Quality

Our small-cap explorers are holding up relatively well in the context of the broader market falls.

And that’s despite some of the world’s largest blue-chip stocks posting hefty double-digit losses in recent weeks.

However, another key reason for this is our focus on high-quality names… Stocks that tend to be tightly held with strong insider ownership.

These companies tend to fall less when markets reach a point of friction, like they have throughout November.

There’s another critical element for junior mining investors to consider to ensure they’re holding strong companies in this niche sector…

Quality begets quality in the junior mining market.

What do I mean?

If you can find junior miners holding valuable assets, then everything else tends to fall into place…

Like good management, access to finance and strong investor interest.

That’s why I draw on my previous experience as a geologist to target high-quality projects or land tenure with strong potential for exploration or development success.

It’s part of a service called Mining Phase One, which leverages my geological experience in the junior mining sector.

I target small explorers and other special situations in the commodity sector, such as mining royalties, service stocks, and high-yielding oil and gas plays.

As I pointed out, the key strategy is to target high-quality geological assets.

That’s why, over the last few weeks, I’ve shown you the key elements of geology that matter most to investors.

Like the BIG THREE in exploration: Grade, Width and Depth.

However, to give my readers a further edge, I also utilise tools such as relative strength and price action to shortlist potential investment opportunities.

And this is where you can use market pull-backs (like right now) to your advantage; this is the time when quality companies are on display.

That’s because junior mining stocks with strong assets tend to fare better during market pullbacks.

And if you can overlay that with an understanding of those assets, then you’ve stacked a lot of probabilities in your favour as an investor.

These two elements give us the edge at our premium junior mining-focused service, Mining: Phase One.

And right now, we’re capitalising on this month’s sell-off, adding two new recommendations to the portfolio.

By the way, to allow new readers to capture this market value, we’ve just reopened the service for a brief window, offering a special discounted rate.

If you’d like to learn more, you can do so here.

Until next time.