Posted on October 11, 2012 by e h

Silver and gold are valuable commodities, and Dias Bras Exploration Inc. as found a whole lot of each. By expanding the exploration of its Bacerac property, the company has uncovered samples of up to 703 grams per tonne of high quality silver and 3.79 grams per tonne of high quality gold. This is actually a rather poorly timed discovery, as the recent sky rocketing of silver prices have leveled to about 35 dollars, meaning that the additional silver on the market may well make the price of it drop down from this value. But what does this teach us as investors?

Speculation investing is a dangerous thing, but it can have great payoffs. Dias Bras Exploration Inc. has hit the exploration company equivalent of the lottery. Whenever a company actually finds raw materials to exploit, profits boom. However, exploration companies are always a gamble. If they don’t find something, there’s simply no payoff. There’s no easy way to explore for minerals either, you simply have to use money and man hours into digging up places hoping for the best. For Dias Bras Exploration Inc., that paid off very well.

If you want to be a successful investor in the natural resources industry, such as say CEO Reed Cagle, you need to take some calculate risks. If you had invested in silver before now when the prices were low but it was set to climb up high you’d be reaping the benefits, but investing in any boom can be dangerous if the bubble bursts. But what if you had taken advantage of this rise in silver prices another way?

For example, investing in an exploration company specifically for digging. Even with the silver boom over they’re set to make a lot of money, so investing in them before now would be a wise move. Selling silver stocks and moving them over to this company right now might not be the worst business decision even. There’s no shame in moving stocks around if you believe it will pay off in the end.

Trends are funny things. If you take advantage of them you can make a lot of money, but if they start to go out of fashion while you’re still on it you can pay the price. Be smart about what booms to invest in, and get out while the going is good.