Double your savings with gold miners

Diversify or perish. I think it’s a quote from HG Wells.

Okay, okay, I know it’s really “adapt or perish.” But if HG Wells managed investments instead of words, I bet he would have fitted that quote to my version.

In fact, you’ve probably heard that golden nugget of investment wisdom before. It is something that all investors should be very familiar with because it is the key to successful investing.

Plain and simple: never put all your investment eggs in one basket. If the market falls below that basket, your savings will break and your savings will spill all over the floor.

It’s easy advice, I know. You may say that diversifying is the smart route, but what exactly should you diversify into?

For that question, today I have an answer: metal mining companies.

Every investor should have some exposure to miners, especially small-cap miners, if they like to capture the quick breakouts that most on Wall Street tend to miss.

It simply gives you access to above-average stock price volatility. Particularly today.

Now many of you might be saying, “But isn’t that a bit risky?”

It can be, absolutely. Any sector that experiences constant volatility (such as crypto assets) can be a bit risky, but much of that risk is managed by having a plan in place. That protects you from making knee-jerk moves or holding onto investments longer than you should.

You just need the right strategy. And if you don’t have one in place, I’d say you should start looking for one now, because the spotlight is starting to shine on the mining industry as the commodity market picks up.

According to a PwC report published last year, the mining industry experienced a turning point in 2016. The top 40 mining companies racked up a net profit of $20 billion, which easily exceeds the loss of $28 billion in 2015. Meanwhile , its valuation rose to 2017 .

In fact, the market capitalization of those 40 companies increased 45% in 2016 to $714 billion.

And the good news continues for miners.

Take gold for example. Miners are particularly sensitive to rising gold prices right now. As gold continues to rise (and it will), gold mining stocks will skyrocket.

It’s time to go long in this area.

In fact, since early December, the VanEck Vectors Junior Gold Miners ETF (NYSE: GDXJ) has moved away from its support line around $30. It is now up 14.8%, a nice rally that could pick up further if it breaks above current levels.

All of this is to say that if you’re looking to diversify further, miners are a great bet.

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