POLLING COMMENT – Mining as high risk part of portfolio

Last week, we asked CMJ readers if they thought the mining industry can afford to remain as a volatile, high-risk p...

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Last week, we asked CMJ readers if they thought the mining industry can afford to remain as a volatile, high-risk part of an investment portfolio. As of this writing (March 26th morning) the Yes responses outnumbered the No's four to one.

Allan J. Willy, a director of JIMINEX INC., sent along this thoughtful comment:

"What exactly is high risk? I think the mining industry represents investments ranging from moderate-risk ('blue chip' majors) to extremely high-risk (fly-by-night resource juniors). And, these days even large business concerns, for example major investment houses, can be considered high risk.

"What makes the mining investment scene workable is the integrated effort from the single prospector through the junior company up to the major. And, of course, it gets riskier as you move down the ladder but the rewards can also be much greater.

"Mining stocks can be represented in both the high-risk (juniors) and lower-risk (majors) portions of the investor's portfolio, assuming, of course, the investor is also diversified in both these areas to cover the risk of industry-to-industry fluctuation. And focused mutual funds can also lessen risk in various areas, though lessened risk is usually accompanied by lessened rewards.

"I voted Yes because I think the mining industry represents opportunity for investment ranging from highly speculative up to a moderate risk, and cannot be considered solely as a volatile high-risk industry."

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