What is potentially and what is actually in the ground...

Yesterday is now one of the rare days where I score a huge alpha.  It is a lesson in investing.  When exploring company using scanning device to tell where the deposit is and what potentially is in the ground, it is better than buying a speculative mining stock with nothing to show.  But when they drill and find something substantial, then it is no longer speculative if there are enough drilling holes to give an estimate of the size of the deposit.  The next phase is to define what is extractable and how much profit it can generate; that is a feasibility study.  The hardest phase at the moment is getting a loan to build the mine.  The early you move into a stock, the cheapest it is...  but this is not necessary so.  When there is so much speculation, it could be overpriced.  This is where I have made big losses.

The lesson is when a stock has confirmed that it has FOUND what it was looking for, especially with good quality results, then unless the price of the mineral has plunged, it is worthy of investing when current shareholders are selling out.  Hence, over the last week, suddenly there is a run on AVB and TON, giving me huge alphas.  But there has a selling out of BDR.  Price of gold has fallen but it has not crumbled.  More gold is being bought than produced on an annual basis at the moment.

KAS has found tin in Morocco and Toyota has taken a stake to ensure it gets its tin in the near future.  While KAS continues to find more tin where it is prospecting, the share price also continues to fall.

So come Tuesday when I am not working, I will be looking for opportunities to top up these stocks which investors are selling out.  My prime investment strategy is still to look for blue chips with good income (ie, banks, banks and more banks...) and I have done well with the small top up on ANZ recently to take advantage of its dividend.