Commodities For Dummies, 3rd Edition

Chapter 18

Mine Your Own Business: Unearthing the Top Mining Companies

IN THIS CHAPTER

Understanding mining companies and their investment suitability

Examining specialized mining companies

Identifying the mining conglomerates

Trading metals outright — through the futures markets — can be tricky for the uninitiated trader. You have to keep track of a number of moving pieces, such as contract expiration dates, margin calls, trading months, and other variables. In addition, metals on the futures markets can be subject to extreme price volatility, and you can set yourself up for disastrous losses. So it’s understandable if you don’t want to trade metals futures contracts, which I cover in Chapter 9. But this doesn’t mean that you should ignore the whole metals subasset class altogether because you may miss out on some substantial returns.

One possible avenue for opening up your portfolio to metals is to invest in companies that specialize in mining metals and minerals. A number of such companies exist, and their performance has been stellar in recent years, especially as a result of increased demand for these metals post-pandemic. Although not all mining companies have had similar ...