WHAT ARE MINING STOCKS ???

Nargis:- Have you guys got the news! Due to heavy rainfall in Andhra Pradesh, coal mining has been hampered and as a result, NTPC is not having enough coal reserves as a backup to generate electricity. There may be power cuts for long hours at a stretch throughout India before Diwali.

Harris:- Oho! That’s sad news. Due to power cuts, my small business gets hampered as I don’t have enough pennies to do expense on inverters or generators. But, every now and then, we can hear that Coal India gets some new mining areas for coals. Then, why is this shortfall?

Katrina:- Oh! You people are talking about power cuts and ‘Bijli Blackout’, but, right now, I am having blackout in Sensex and Nifty. Why the hell I invested on those shares! It is a total loss for me. The Indian market is very volatile right now and the global economy is still not recovering well since its downfall in 2008.

Arindam:- Well, Katrina…this time, the global economy is facing the heat of sovereign debts. By the way, why are you not investing on mining stocks?

Katrina:- ‘WHAT ARE MINING STOCKS ???’

Nargis:- Hmm…the stocks of those companies which are engaged in mining of valuable metals or natural resources. Am I right, Arindam?

Arindam:- Yeah! You are. But, unlike India, investors of USA are more interested in investing in these types of stocks.

Harris:- But, there is risk in investing in these stocks. What’s the guarantee that a company will get the desired amount of metals or natural resources, by digging a particular area? Whatever they predicted to fetch, they may get less output than that.

Katrina:- No risk, no gain, dude! Invest on those shares when a company declares about a new area of exploration. Every share in its nascent stage is bound to get higher price due to sensitive human psychology and market hypes.

Nargis:- Hmm…Katrina…it seems that you have burnt your hands in stock markets several times to learn those tips and tricks.

Harris:- Just hang on! Now, I have a valid question. As an amateur investor, should I invest on metal stocks or stocks of natural resources?

Arindam:- Ha ha ha….Harris, you can never ignore the black diamond, it will always have its own demand. But, still, in this global turmoil, the safest investment will be on gold stocks. Gold is such a commodity which will never lose its glitter, though; there may be a temporary crash as per the law of statistics. USA is the dominant holder of gold, but, China has started the race now.

Katrina:- How funny! When I know, that there will be a temporary crash on gold stocks in the near future, why should I buy those stocks?

Arindam:- Don’t worry; the crash will not kick you down from the break-even point, but, look that scenario from the other angle. If gold stocks crashes, there will be new buyers from Middle East Asia and other Afro-Asian countries. As a net result, the eroded soils from USA will have its sedimentation to the banks of Asian markets. That’s none of your headache. As a trader or investor, you will keep on gaining as a ferry-boat owner. So, go for the Mining Stocks. It’s the ideal time for it.