The Mining Sector Explained
Whilst there are some large and established companies in this sector, there are also many speculative stocks which often are of low value or so-called penny shares.
What you are buying when you get these is the potential for reward but also the knowledge that if they don't find anything then you might lose the money invested in that stock.
But one big find or mining turning up rich reserves after their speculative exploration can lead to big money for the company and consequently this can lead to a much higher stock price which can be great news for you.
Historically mining can be seen to have had lots of volatility with prices going up and down radically not just related to what the company actually mines and finds but also simply the natural volatility in the commodity that it is they trade, whether it be diamonds, golds or something else.
So if you have a risky appetite and want some exposure to stocks that could go up a lot or down a lot then you could consider some speculative companies on perhaps AIM that are currently prospecting or exploring for the next big find.
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