Returning guest Dave Kranzler of Investment Research Dynamics returns to the program to discuss the use of leverage when investing in precious metals and mining stocks. Dave co-manages a precious metals and junior mining stock fund and is the editor of the Mining Stock Journal and Short Seller’s Journal.
Leverage, as any savvy business owner or investors knows, can dramatically increase the growth rate of one’s wealth when things go in your favor. But when you use leverage to invest and things don’t go in your favor, your wealth can begin to evaporate quickly. If the use of leverage goes wrong for the investor it is even possible that you lose all of your invested capital AND more leaving you with a debt to pay off.
Many people are attracted to mining stocks because of the built-in leverage they offer relative to the price of the underlying commodity that a mining company mines. Not only are the mining stocks essentially a leveraged instrument, but there are derivative financial products available to the investor that even further increases the leverage already built into a mining stock.
In this interview, Dave Kranzler discusses with Bill Powers how to deal with the emotions of greed and fear when investing in mining stocks and also ways in which the investor might utilize the various leveraged financial instruments of margin accounts, put and call options, JNUG and DUST (3x daily ETF’s) and gold and silver futures contracts.
0:05 Introduction of Topic and Guest
1:07 Dealing with the emotions of greed and fear when investing
12:23 Using margin to invest in mining stocks
15:25 Discussing the probability of successful trading
18:11 Using put & call options on mining stocks
24:22 How to play JNUG & DUST (3x daily ETF’s)
29:43 Discussing Gold & Silver Futures Contracts
32:45 Dave’s concluding thoughts regarding leverage
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