How To Start Investing In Mining Stocks
2020 was a booming year for the stock market. Well, not exactly at first. When the year began, things seemed pretty normal for mining stocks and other sectors. That is when the pandemic arrived and changed everything. All types of stocks and assets fell to lows by the middle of March. This left the market in an unknown state, with investors having no clue when things were going to change. While many sectors remained stagnant, the mining stock sector took off. Generally when the economy is in a worse spot and the dollar is down in value, mining assets increase in price. Investors use assets like gold and silver instead of the dollar in times like this.
So obviously, this has been very relevant in 2020 and now 2021. We just entered a new year and there are many who think the market is too volatile to invest in mining stocks. That is where people are wrong. The sector for mining stocks started booming at one point last year. This caused gold and silver to reach new highs in the market. As of January 6th, these assets are at $1,916 and $27 per ounce respectively. When the metal prices go up, so do the stocks associated with them in a regular setting. This means there is potential to make money with mining stocks. Even some mining penny stocks can be beneficial to you when investing. But where do you begin? Well, let’s look at the best ways to be prepared to invest in mining stocks.
Research Before Investing In Mining Stocks
There are plenty of mining stocks that have been trending in the market in the last year. This can make it difficult to know the best mining stocks to watch. One key thing to do before investing is quite simple actually. This involves doing a good amount of research before investing. For example, let’s look at one thing driving mining stocks at the moment; government stimulus. Recently the US government passed a $900 billion COVID relief bill. This comes as COVID cases are skyrocketing still. Since stimulus hurts the value of the dollar, it brings mining assets upwards. So news that is happening in the world can help you decide if it is the correct time to invest in mining stocks.
But this is not the only news that can affect your decision. The second type of news to look out for is news from mining companies themselves. For example, when earnings season comes around and quarterly reports are released, it can dramatically impact the price of a mining stock. Mine advancements, acquisitions, earnings, and scandals are all great things to look out for when investing in a mining stock. But news isn’t the only step you should take when deciding to invest in these mine assets. Let’s look at what the second step could potentially be when investing in mining stocks.
How Volume Impacts Mining Stocks
Something that is often overlooked by new investors is the volume of a stock. The volume of a stock essentially shows how much it is being traded on any given day. Volume is important when investing in mining stocks for a variety of reasons. The first of which, has to do with market movement. Let’s take a stock like Barrick Gold Corporation (GOLD Stock Report) for example. If GOLD stock price is going up on a certain day, but its volume is low, it could potentially suggest it may go down soon. While there are no guarantees in the market, this is a trend that has been seen before.
A company could also potentially have a volume spike for one day or one week or whatever the time frame may be. Knowing the right time to enter a mining stock when investing short term is essential. It does not matter as much if you are long term investing in mining stocks, but is still certainly a factor. Usually when a mining stock is performing poorly, its volume will fall as well. Volume is definitely something to take a look at as a part of the research process for investing.
Where The Market Stands For Mining Stocks
Well, now we have entered the year of 2021. Nobody really knows where the market for mining stocks could move from here. Some analysts have predicted gold prices reaching upwards of $2,500. While this sounds ambitious, look at how the yellow metal performed last year. Silver prices are rising once again as well, potentially leading up to a new high.
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Once again, nothing is actually known for sure, which is why research is very important in these times. The above steps could help when looking for steps to invest in mining stocks. So far this year, things are looking up for mining stocks. As a result of rising metal prices, plenty of mining stocks have been able to increase in price so far. Now, we look to the future to see where this sector goes throughout the new year.
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