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Gold/Mining/Energy : Gold and Silver Juniors, Mid-tiers and Producers -- Ignore unavailable to you. Want to Upgrade?

To: Proud Deplorable who wrote (5718)	1/31/2006 9:27:48 PM
From: loantech	Read Replies (1) \| Respond to of 78410

You know you are right.

To: Proud Deplorable who wrote (5718)	1/31/2006 9:46:10 PM
From: Land Shark	Respond to of 78410

I hold a small position in TK, which basically I ignore. I might add to it some day if they strike, but otherwise I consider it a lotto ticket - all or nothing. I certainly wouldn't bet the farm or the prize sow on it. 'Grassroots' plays I take it are any explorer without resources, poking around outside of Canada? I like the term "Moose Pasture" play for Canadian explorers myself. It tells a lot.

To: Proud Deplorable who wrote (5718)	2/1/2006 10:01:17 AM
From: E. Charters	Read Replies (2) \| Respond to of 78410

I just thot of a way to explain the difference between risk and uncertainty. Most people use them interchangably, but they are often misused and the meaning should be cleared up. Risk is what you put down on a bet. Uncertainty is the odds or percentage of a win/loss. (Can be established statistically, but gamblers try to gain an edge) Extremely long term then, capital at risk is defined as the capital bet, times the percentage odds of a loss. Since the odds would normally have to be well north of 50% to make sense at all, the concept of risk/reward is dragged in, as the per-cent-gain of a win. This must be better than double usually, as it is rare to see opportunity that affords more than a 50% chance of gain. If one then multiplies the gain expected or multiple, times the percentage odds of a win, times the capital at risk, or bet, then one gets the break even point (losses equal gains) of the number of forays to a "certainly" expected gain. One's retained capital after each loss should then make a profit. So to illustrate, if the odds of a mining stock hitting are 30%, then one must have at least 3 times the capital on hand to outlay at least 3 times, perhaps 4 to be safe, and one must expect at least triple or 300% gain on a win, in order for the investment(s) to make sense. Since very few stocks get homeruns or strikes, perhaps 10% of the good ones, if one hedged one's bets very well, one would have to have 10 times the average investment on hand, and invest at least 10-15 times, -and- expect a 10 banger, or 1000 per cent gain (calculating the odds of that type of gain complicates it and is necessary but the idea is there), -- or it would not be worthwhile investing in these stocks at all. Fortunately mining stocks are often price low at entry, so that offsets the uncertainty and hedges the risk. This puts a ceiling on price of entry. Unless one expected 10 to 15 dollar stocks routinely on strikes, it would make little sense to buy in at 60 cents to a $1.00 on most drillers even on a bet as good as 10% certainty. 15 cents to 25 cents would be the preferred range. This makes being in on the 3rd phase of a distribution very iffy. A sucker's game. Most of the uncertainty in small mining stocks is not in whether or not they can find a deposit, often they can start with one, but whether or not they can find the capital and expertise to optimally take advantage of development. You could call that financial uncertainty. Think of it as akin to being on a cliff face, climbing a mountain. It is easy to answer "what is at risk". The answer is "your life". The uncertainty? That is also easy. You don't know. The gain? Easy, a great thrill, but no profit except time well spent, say. There however it is hard to qualify let alone quantify the return on investment. But people climb mountains like made, and invest in airline stocks. Nobody asks them why anymore. It is accepted madness. EC<:-}