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If It Don't Grow…..

As the saying say if it doesn't grow then you gotta mine it! But how profitable are stock and shares in mining concerns and products, and are there any things that we need to be aware of before we sink our cash into them? Read on to find out.

Mining



Mining is something of a controversial activity these days. But it still remains the main source of fossil fuels. As well as precious metals and stones like diamonds. So that means there is still potential for investing in this market.


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Are mining stocks a good buy?



Well, the truth is that yes they can be. The mining operation is usually focused on releasing something that is profitable from the ground. So if they strike oil, or gold, or the like, then you are in for a potentially large return.


However, success is not guaranteed. In fact, mining is a high-risk business and the higher the risk, the more chance that you could lose your entire investment.

Mining as high risk



Obviously, as physical activity mining is high risk, as it entails working with large plant machinery, in confined and unstable spaces. As well as sometimes with explosives.


That means it's dangerous for the people that do the work, so they need to be paid more. As well as being dangerous for the companies or individual that invest in them, because there's always the chance that your equipment could be damaged by accident. Which can stop production and raise the costs.


Also, mining can be a politically high risk as well. As many companies need to find some way of overcoming environmental objections to their mining the site that they are working on.


This often entails using added care in the area of environmental responsibility. Which could take the form of conducting a survey to ensure that the surrounding land isn’t damaged. Or making sure that top quality waste removal systems are used, like the Abestmeter flow meters to ensure an effective cleanup. Which will minimize the impact on the location that you are working in.


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Which stocks?



Of course, there is a way to make investing in these areas a bit safer, such as choosing the larger more stable companies known as major stocks.


These are established companies with a good amount of funding and profit behind them. They are usually put out steady production and are generally not as likely to quickly implode as the newer more junior concerns.


The junior concerns are the newbies on the scene, and while you can make a really big killing with this sort of investment if you are lucky, you are betting on a much or unreliable horse. Kind of like difference between the FTSE 100 and penny stocks!


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Of course, you always have the ability to investing in stocks that relate specific to the product that is mined; such as gold or diamonds. Instead of investing in the mining operation itself. But beware as there are many hidden costs with high-value stock, such as security. That can seriously eat into any profit margin you may have on these items.


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