Ever since gold, silver and other precious metals have started heating up again in their current bull market, investors and investment newsletters have gotten very interested in buying Canadian Stocks.
The reason, of course, is that Canada is rich in natural resources and a large portion of its stock exchange activity is in these resource stocks and junior mining companies in particular.
Most investors who have been around for a while have, at one time or another, either:
- made a killing by buying Canadian stocks
- known someone whose fortune was made or enhanced by resource stocks like junior mining companies
- had someone recommend to them that they buy Canadian stocks
The returns, if you buy right and sell right, can certainly be phenomenal. 1000% returns are fairly common and some have been in the 10,000% plus category. When you buy for a few pennies and sell for $10 – $20, the multiplier is just huge.
One of the reasons people can make those huge returns is because there are times when good Canadian companies sell for next to nothing even though there is nothing wrong at the time.
That’s just one of the things you need to know to buy Canadian Stocks, here are some more:
- During times of bull markets in a particular commodity, companies with nothing behind them will put the name of the commodity in their company name and shares will trade for WAY more than they are worth – for a while. Do NOT buy these.
- You make money when you buy, but don’t forget to sell. Three good pieces of advice are to buy in tranches, place “stink” bids hoping to get filled on a day of wild fluctuation on the downside with no company specific bad news and buy in the summer time when prices can go VERY low and bids can dry up altogether even on good Canadian stocks.
- The entire Canadian stock exchange and brokerage system has a tendency to go on vacation during the summer time. Try to buy during that slow time (using stink bids) and don’t get too bent out of shape if you see prices plummet. It is to be expected. Some will even sell in May and go away – but that has tax consequences so consult your tax advisor.
- When you buy Canadian stocks (and sell) you will likely do so in Canadian dollars, if you are trading on the Canadian stock exchanges (some trade on US exchanges in US dollars also, using different symbols). When you see write-ups on these stocks along with buy/sell recommendations make sure you know which currency the recommendation is in.
- Many of these Canadian stocks are available on US stock exchanges in the form of ADR’s, American Depository Receipts. They trade in US dollars, which is convenient, but the pricing is usually only reported at the end of the day. If you want to place limit orders, see trading activity or just want the most accurate representation of your investment, I recommend using an online broker equipped to allow you to trade on the Canadian stock exchanges in the “native” security.
Any serious resource investor, especially in gold, silver or uranium, is going to want to buy Canadian stocks and do so on the appropriate Canadian exchange (Toronto, Venture).
Canada is such a resource rich land that it simply draws the type of companies you want to invest in. And the government there is, for the most part, mining friendly so that you will have far less political risk if the mines owned by the companies you invest in are actually in Canada.
Be wary, though, many Canadian junior resource companies have their primary projects in other portions of the word.
If this type of investing interests you then you owe it to yourself to check out a risk free trial to Casey’s Gold and Resource Report.
That is one of the premier investment newsletters (at a reasonable price too) you will want to have available to potentially make those huge returns, and give you the advice you need to avoid or limit your losses.
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