There is an age old saying, if something isn’t grown from the ground, then it must be mined. It is a phrase prominently used by those who have an invested interest in the mining industry and it is a phrase that stands true today. Mining is big business, of that there is no doubt, but this means that mining stocks are going to be presented to you regularly. Newswires, media outlets, and brokers will all try to push in the direction of the “next big thing” in the world of mining shares, but before you invest you need to know the difference between major and junior mining shares.
Mining shares comes in two different categories, juniors and majors. Majors are the big names in the field; such companies have built their name and have money in the bank to prove it. To qualify as a major you need to have years of history within the industry and world operations that are well known for their profitability. When it comes to mining shares majors tend to be the names that you would have wanted to invest in yesterday. They usually provide investors with steady growth and are considered easy to invest in from a security perspective. Juniors are the opposite of majors in many ways. They are relatively young mining companies, who have short histories and lesser capital. Juniors present a far riskier investment avenue as they can only go one of three ways during their formative years. Unsurprisingly it is fairly common to see a junior fail, leaving anyone who bought such mining shares out of pocket. The second fate is that a major sees promise or minor success in a junior and justifies its purchase. Lastly, a junior on a rare occasion may discover a large mineral deposit that elevates its profit levels into major status, making investors big profit in the process.
As an up and coming mining investor you are going to need to choose between major and junior mining shares regularly. The answer with regards to where you put your money depends on what type of investor you are and what exactly it is you are looking for in terms of return. Juniors have the potential to offer a huge amount of return, as all majors started out that way. But you need to understand the level of risk that is involved. In reality juniors are only suitable for any risk-designated capital you have lying around. Majors on the other hand are high-cost, low-risk, and can deliver stability to your portfolio, shoring things up during times of market instability.
The world of mining shares is an interesting one, this because you are going to see shares that encompass both sides of the stock market spectrum. Juniors and majors are what you are going to be looking at, with each encompassing both a wide range of pros and cons. As far as which to choose, that will all come down to the type of investor you are.
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Alexander Bowring is a London based writer and a Southampton Solent University Screenwriting graduate. He has worked alongside TV personality and Telegraph feature writer Alison Cork, whilst also having produced content for ITV, This Morning, Canvas8, Who’s Jack, Alison at Home, and Bonallack & Bishop Solicitors. Alexander also has a keen interest in investments.