Here’s an interesting piece of news; Nevada Copper Corp has recently decided to invest in 46 million common shares in Mercator Minerals Ltd. On top of the shares they already have that comprise 37.4% of the company, this means they now officially hold 43.1% of Mercator Minerals Ltd. And yet if you look at Mercator Minerals Ltd stock, they’ve hit a record low. They’ve more than halved in value from less than a year ago, and are a fifth of what they were in early 2011. This in turn is only a third of the point they were in in 2008, meaning their shares are now worth about one fifteenth of what they were at the companies height. So why would anyone invest in a company having such a low share period?
To give us a quick idea of the sort of investor who traffics in the natural resource industry, check outÂ Charles Reed Cagle VisualCVÂ profile. To be that successful in a volatile industry, you need to seize on opportunities and take a few calculated risks. Investing in a company when it seems stable but the stocks are low is actually a great move. Though the stocks may decrease a tiny bit more than you would have liked, eventually odds are they will increase again and net you profit. At the very least, if the stocks are cheaper than they could be it isn’t as high risk investment as it could be.
Aside from that we must also consider the type of company Nevada Copper Corp has decided to invest in. If this were a manufacturer or the like it would likely be a bad idea. But Mercator Minerals Ltd. is a mining company. As such, it has rises and falls as new resources are discovered and the materials they mine rise and fall in value. Even if you invest in a company having low shares, there is a chance the shares will rocket up if they discover new materials or there is a scarcity in ones they mine already. This is a gamble, but since Mercator Minerals Ltd. already has substantial mining they are more likely to receive this kind of boom than most.
Investing in natural resources is a gamble at times, so you need to know when to jump and when not to. If you buy shares when they’re low in a stable company and you can receive great profits.