1 2 3 25 26

Could Gold Hit $1900 In 2019 ……

May 2, 2019
By Dudley Pierce Baker

$1900 gold this year would exceed the wildest imagination of most investors.

I do think gold will exceed $1900 in the next two years or so, but this year?

In the article I shared with you this morning from Gold Switzerland, they do see the possibility of Gold at $1900 THIS YEAR (2019).

"... So the only short term method to predict gold’s next move is looking at gold’s technical picture. This tells us that gold is now in the finishing stages of a corrective move. Once the correction is over and gold breaks the Maginot Line at $1,350, we will see a quick move to $1,600. I would not be surprised to see gold making new highs in 2019 against the dollar, above $1,920. The next move up could start as soon as in the next 2-3 weeks. Possibly, but less likely is that the move starts August – September...."

When gold starts to climb to $1500, $1600, $1700, $1800 and $1900 and more, you must know that virtually all resource shares and warrants will be on fire and rising hundreds but probably thousands of percent. Even those dogs and cats which you think are worthless will probably come back to life.

Ten baggers, (1,000% or more) will be common place and stock warrants trading on those shares will be 2 times, 3 times or more than just ten baggers. I realize this sounds crazy to you, but this is what is coming and coming soon.

This is not the time for resource investors to be shy or timid, you should already be invested at these low prices but if not, you must get started now and I mean today.

I would like you to join me immediately as a subscriber to my service at http://CommonStockWarrants.com

You will have immediate access to my Canadian and U.S. Databases with all stock warrants trading with complete details.

Subscribers to my Gold and Lifetime Subscription will also have access to my personal portfolio and my weekly audio. This information will allow you to know exactly what I am doing, buying or selling.

JOIN ME NOW,

Dudley

The Master Tournament & Some Great Articles Requiring Your Attention

With The Masters rapping up in Atlanta, we have Tiger, still in the hunt with a few holes remaining as I write this piece.

Hello Subscribers and others interested in possibly becoming subscribers.

Gold has substantially fulfilled our views as well as the views of TheTechnicalTraders.com to the down side target of no more than $1278. We could easily trade in a tight range now for a few weeks, before we resume the upside move and then take out the longtime overhead resistance around $1400 and then head to $1500 perhaps by years end.

You need to be in position very soon to capture what I believe will be the potential for many 10 baggers in resource shares and much more in the stock warrants on those shares.

Get Started Now

Recent Articles On Our Websites:

Enjoy your weekend but don’t go to sleep and miss this opportunity,

Dudley Pierce Baker
http://CommonStockWarrants.com

GET STARTED NOW

 

Your Best Opportunity For Wealth Creation

You can call me lucky if you want, I don’t care. I am only out to become wealthy in the next two years.

If you choose to sit out this coming rally you will have no one to blame but yourself, but don’t tell your spouse as they will  surely disown you, if you miss this opportunity.

This is Dudley Pierce Baker, the editor of http://JuniorMiningNews.com and http://CommonStockWarrants.com and I believe we are on the verge of a major move up in the resource sector.

Timing is everything in the markets and the timing seems to be on our side for resource investors.

The next two years are being talked about now by several newsletter writers and even by Jim Cramer (CNBC) as an excellent time to being investing in the precious resource sector.

In a few years, some investors will think they are smart as heck when if fact they are just lucky to have been invested in the resource sector at this particular time.

So, timing will prove the expression correct, that 'it is better to be lucky than to be smart'.

The important take away for you as an investor is that the stage has been set (bottoms are in and bases built) and the next two years may well present investors with an explosive rally in silver, gold, copper and possibly uranium.

Simon Constable writing for TheStreet.com, Why It's a Good Time to Invest in Copper has an interview with Jim Cramer on Freeport-McMoRan: Prices Are Exploding.



I own a small copper company operating in Nevada currently selling for C$0.11. Over the last decade or so these stares have climbed to C$4.00. Whether the shares can reach C$4.00 again in the next two years, I surely do not know, but, I have a really nice position of hundred ’s of thousands of shares in this company, just in case, I get lucky.

Our colleagues at TheTechnicalTraders are looking for the next two years to possibly take silver and gold to new highs but probably at least to the previous highs of $50 and $1900, respectively. You will definitely want to read their latest article and see their charts.

Best Precious Metals Investment And Trading For 2019

I own many silver and gold companies and some even have stock warrants trading which can provide investors an even greater reward over the next two years, if we get lucky.

Some warrants I own on one of my favorite gold companies, in my opinion, could ‘easily’ sell for over C$5.00, and they currently sell for a mere C$0.22.

I know that sounds crazy but you see I expect to ‘get lucky’ and make a fortune on just this one position.

I own a nice position in a silver company which recently completed a private placement in which I participated and greatly increased my position. The shares are currently selling for C$0.13 and, in my opinion, could  ‘easily’ sell for well over C$1.00, if I get lucky. Another wealth building opportunity.

It is impossible to say how high some of these shares or warrants could go in a rip roaring bull market, but my (best read article ever) addresses the possibilities of outrageous gains ahead,

Gold and Silver Stocks, How High Can They Go

Frank Holmes, Rick Rule, David Morgan are in the camp of substantially higher prices.

If you would like to ‘get lucky’ with me, I encourage you to join me as a subscriber.

My Gold and Lifetime Subscribers have access to my personal portfolio and to my weekly audio and you will know exactly my views and current positions.

When I ‘get lucky’ this just might be the perfect time to hang it up and move to a sleepy little fishing village in Mexico, but hell I have already done that. So maybe I will need to seek out a new opportunity/adventure.

Life is great but it is going to be greater yet, when I (and hopefully you as a subscriber) become wealthy or wealthier in the next few years.

JOIN ME NOW, folks, I mean now do not delay this incredible wealth building opportunity.

Dudley Pierce Baker
Chapala, Jalisco, Mexico
Founder - Editor
http://JuniorMiningNews.com
http://CommonStockWarrant.com

Best Precious Metals Investment And Trades For 2019

It’s been years since the gold and silver topped out in 2011. We have been waiting for a new bottom form and a new bull market to emerge for nearly 8 years. In this article, I’m going to compare palladium, gold, platinum, and silver and show you which of these precious metals I feel is the best long-term investment and also the best trade for 2019.

The analysis presented below is based on technical analysis using previous significant highs, and Fibonacci extensions. Both of these techniques work exceptionally well for predicting price targets both to the upside and also price corrections to the downside. If you have never used Fibonacci retracement or extensions in your trading I highly recommend learning more about them. I have no doubt it will improve your market price projection targets for your investments. I have found this technique to be the number one best trading tool for projecting future price movements in all asset classes.

The charts below will show to price forecasts for each metal. The first price target is based on the previous significant high that price made between 2000 and the current timeframe. Previous significant highs are typically the first target for the price to reach and that is also our first major upside target for these metals. The second price target I use is based on Fibonacci extensions using stand out lows formed anywhere between 2002 to the current price time and projecting that forward into the future beyond the previous highs shown on the charts.

So let’s get started with the worst precious metal to invest in and work your way down to the best precious metal.

 

#4 PALLADIUM

Palladium, In my opinion, is the worst precious metal to own for 2019. While palladium is used in everything from dentistry to groundwater treatment, Palladium is by far the most versatile precious metal. Only a little while ago palladium was not nearly as popular as it is today due to the incredible economic growth in developing countries especially China. This multi-use metal is steadily growing its importance in the markets hence the strong performance to date.

There is no doubt that Palladium has staged a massive rally from the 2009 lows and also another mega-rally from the 2016 low. But, knowing the best performing investments eventually become the worst performing investments later, let’s take a look at the chart of Palladium and see why I feel as though Palladium is the worst investment metal for 2019.

The monthly chart of Palladium below shows the previous high in price in the year 2000. That high has been broken and now the price has gone parabolic blasting above that level to the 1550 mark. At this point, the previous high target has been breached and we no longer see that as a price target. There is zero upside potential based on the previous high.

The second price target is based off the lows in 2016 using the Fibonacci extension the pullback in 2018 followed by this recent rally. This gives us a price projection of nearly $1500 an ounce. As you can see this perfect bull flag (continuation pattern) has reached the hundred percent Fibonacci measured target of 1500. Therefore I see this upside move as being complete and it is more likely to pull back and correct in 2019 with 0% upside potential. Anything beyond this price level is a bubble which could burst at any time and carries a high level of downside risk.

 

#3 GOLD

Gold is the second worst investment for 2019 when it comes to precious metals in my opinion based on potential upside growth. Keep in mind I am very bullish on the price of gold looking forward but other metals definitely have a lot more profit potential than gold.

As you can see on the monthly chart of gold the previous high was about $1900 in 2011. That level is our first price target for gold upon a breakout of this multiyear basing formation it has been forming since 2013. This makes for a potential gain of 46% in price.

Now if we apply a Fibonacci extension to get our second target we take the low from 2002 to the high in 2011 and bring it back down to the low in 2015. This gives us an upside price target of $2681 an ounce. Based at the current price of gold we could see gold rally 106% over the next year or two.

 

#2 PLATINUM

Platinum is the second best metal for short-term and long-term gains from 2019 and beyond. Looking at the monthly chart you can see the previous high in 2008 was around $2300 based on the current price if we get a move to the previous high it provides a 176% potential gain. Also, notice how the price is testing the major support level forms in 2008 this could act as a very significant double bottom in price as well.

Using Fibonacci extensions we take 2001 low up to 2008 high and back down to the recent low in 2018 or 2009 both are the same price this projected price gives us an upside target of $2659 an ounce. Based on the current price of platinum that gives us the 221% potential gain over the next couple of years.

 

#1 SILVER

The number one precious metal to own in 2019 and beyond is silver. Based on the previous high in 2011 and looking at the current price of silver there is a potential upside gain of 226%. Also, notice how silver is putting in a potential double bottom from the 2015 lows it also goes all the way back on the chart to 2006 through 2010 as a key support zone. Much like platinum, silver is at support and could very easily start a new mega-rally at any time.

Using a Fibonacci extension, we can get our second target for silver based on 2002 low and 2011 high along with the 2015 bottom. This gives us a $59 price target. With the current price of silver trading at $15 an ounce, there is an upside target of 296% potential gain over the next couple of years when silver starts its next bull market. In fact, I recently purchased a couple more silver bars from SDBullion to add to my silver stacks because I like the potential.

 

CONCLUSION:

In short, I feel precious metals should be a part of everyone’s portfolio as a long-term hedge and investment. I see precious metals as an insurance policy in case all hell breaks loose in the financial system and we need to fall back to something with physical value for a short period of time.

With that said, I am a firm believer that you should never overload in one particular investment or asset class. But I do feel certain metals should have a heavier weighting based on their current potential. The more upside potential the more of that metal you should own shares or physical bullion.

How should you invest and trade precious metals? There are a few ways to own metals as a trader and investor. You can own physical bullion rounds or bars and I don’t recommend coins simply because you pay a premium for a design and if metals ever do become a true currency the added value you paid for a design stamped in the metal will be tossed out the window and you lose that value as price will be based purely on weight.

A really simple way to trade and invest in metals are trading the ETFs for each bullion like Gold (GLD), Silver (SLV), Platinum (PLTM), and Palladium (PALL). Another and even more simple way is to own the GLTR fund which owns a basket of Gold, Silver, Platinum, and Pallium. Obviously owning precious metals mining stocks is another (GDX, GDXJ, JNUG, NUGT etc..)

If you want to join a group of professional traders, researchers, and friends, take a look at our trading newsletter to learn how we can help you find and execute better trades each month.  We believe 2019 and 2020 will be incredible years for skilled traders and we are executing at the highest level we can to assist our members.  In fact, we are about to launch our newest technology solution to better assist our members in creating future success.

Our team has 53 years of experience in researching and trading makes analyzing the complex and ever-changing financial markets a natural process. We have a simple and highly effective way to provide our customers with the most convenient, accurate, and timely market forecasts available today. Our stock and ETF trading alerts are readily available through our exclusive membership service via email and SMS text. Our newsletter, Technical Trading Mastery book, and 3 Hour Trading Video Course are designed for both traders and investors. Also, some of our strategies have been fully automated for the ultimate trading experience.

http://TheTechnicalTraders.com

RECENT CLOSED TRADES

Chris Vermeulen
Technical Traders Ltd.


Stock Warrants | Wikipedia

Stock warrants are defined on Wikipedia, https://en.wikipedia.org/wiki/Warrant_(finance):

"In finance, a warrant is a security that entitles the holder to buy the underlying stock of the issuing company at a fixed price called exercise price until the expiry date. Warrants and options are similar in that the two contractual financial instruments allow the holder special rights to buy securities."

Common Stock Warrants provides a database of stock warrants trading in the United States and Canada in all industries and sectors. The service has been in existence since May 2005 and was initially named, PreciousMetalsWarrants.com. In 2013, services were expanded and the name was changed to CommonStockWarrants.com.

CommonStockWarrants provides:
A Database of all trading warrants in the U.S. and Canada
A Listing of all trading warrants

Ownership of CommonStockWarrants is the sole property and responsibility of Dudley Pierce Baker.

Articles on stock warrants by Dudley Pierce Baker have appeared on many websites, including Kitco. 321Gold, Goldseek, TheMorganReport, 24HourGold, TalkMarkets, SeekingAlpha and many more.

Videos and interviews have been done with BNN, FuturesMagazine, ResourceWorld, EllisMartinReports, KorelinEconomicReports, PalisadeRadio, TheGoldReport, TheFinancialSurvivalNetwork, JayTaylor and others.

Books - In 2017, "The Stock Warrant Handbook, Your Personal Guide To Stock Warrants" was written by Dudley Pierce Baker and is a useful research tool to all investors:

Chapter Titles:
What is a Warrant?
Background and History of Warrants
Why You Should Consider Warrants
A Warrant On What?
Market Timing
Portfolio Allocation
Private Placements vs. Trading Warrants
How I Determine Current Values
Are You A U.S. or Canadian Investor?
Brokerage Firms
How to Place Your Trades

The Stock Warrant HandBook, Your Personal Guide to Trading Stock Warrants is available free to visitors of http://CommonStockWarrants.com and is also available on Amazon.com.

Excerpts from Wikipedia, the free encyclopedia:

Warrants are frequently attached to bonds or preferred stock as a sweetener, allowing the issuer to pay lower interest rates or dividends. They can be used to enhance the yield of the bond and make them more attractive to potential buyers. Warrants can also be used in private equitydeals. Frequently, these warrants are detachable and can be sold independently of the bond or stock.

In the case of warrants issued with preferred stocks, stockholders may need to detach and sell the warrant before they can receive dividend payments. Thus, it is sometimes beneficial to detach and sell a warrant as soon as possible so the investor can earn dividends.

Warrants are actively traded in some financial markets such as German Stock Exchange (Deutsche Börse) and Hong Kong.[1] In Hong Kong Stock Exchange, warrants accounted for 11.7% of the turnover in the first quarter of 2009, just second to the callable bull/bear contract.[2]

Structure and features

Warrants have similar characteristics to that of other equity derivatives, such as options, for instance:

  • Exercising: A warrant is exercised when the holder informs the issuer their intention to purchase the shares underlying the warrant.

The warrant parameters, such as exercise price, are fixed shortly after the issue of the bond. With warrants, it is important to consider the following main characteristics:

  • Premium: A warrant's "premium" represents how much extra you have to pay for your shares when buying them through the warrant as compared to buying them in the regular way.
  • Gearing (leverage): A warrant's "gearing" is the way to ascertain how much more exposure you have to the underlying shares using the warrant as compared to the exposure you would have if you buy shares through the market.
  • Expiration Date: This is the date the warrant expires. If you plan on exercising the warrant, you must do so before the expiration date. The more time remaining until expiry, the more time for the underlying security to appreciate, which, in turn, will increase the price of the warrant (unless it depreciates). Therefore, the expiry date is the date on which the right to exercise ceases to exist.
  • Restrictions on exercise: Like options, there are different exercise types associated with warrants such as American style (holder can exercise anytime before expiration) or European style (holder can only exercise on expiration date).[3]

Warrants are longer-dated options and are generally traded over-the-counter.

Secondary market

Sometimes the issuer will try to establish a market for the warrant and to register it with a listed exchange. In this case, the price can be obtained from a stockbroker. But often, warrants are privately held or not registered, which makes their prices less obvious. On the NYSE, warrants can be easily tracked by adding a "w" after the company's ticker symbol to check the warrant's price. Unregistered warrant transactions can still be facilitated between accredited parties and in fact, several secondary markets have been formed to provide liquidity for these investments.

Comparison with call options

Warrants are very similar to call options. For instance, many warrants confer the same rights as equity options and warrants often can be traded in secondary markets like options. However, there also are several key differences between warrants and equity options:

  • Warrants are issued by private parties, typically the corporation on which a warrant is based, rather than a public options exchange.
  • Warrants issued by the company itself are dilutive. When the warrant issued by the company is exercised, the company issues new shares of stock, so the number of outstanding shares increases. When a call option is exercised, the owner of the call option receives an existing share from an assigned call writer (except in the case of employee stock options, where new shares are created and issued by the company upon exercise). Unlike common stock shares outstanding, warrants do not have voting rights.
  • Warrants are considered over the counter instruments and thus are usually only traded by financial institutions with the capacity to settle and clear these types of transactions.
  • A warrant's lifetime is measured in years (as long as 15 years), while options are typically measured in months. Even LEAPS (long-term equity anticipation securities), the longest stock options available, tend to expire in two or three years. Upon expiration, the warrants are worthless unless the price of the common stock is greater than the exercise price.
  • Warrants are not standardized like exchange-listed options. While investors can write stock options on the ASX (or CBOE), they are not permitted to do so with ASX-listed warrants, since only companies can issue warrants and, while each option contract is over 1000 underlying ordinary shares (100 on CBOE), the number of warrants that must be exercised by the holder to buy the underlying asset depends on the conversion ratio set out in the offer documentation for the warrant issue.

Pricing

There are various methods (models) of evaluation available to value warrants theoretically, including the Black-Scholes evaluation model. However, it is important to have some understanding of the various influences on warrant prices. The market value of a warrant can be divided into two components:

  • Intrinsic value: This is simply the difference between the exercise (strike) price and the underlying stock price. Warrants are also referred to as in-the-money or out-of-the-money, depending on where the current asset price is in relation to the warrant's exercise price. Thus, for instance, for call warrants, if the stock price is below the strike price, the warrant has no intrinsic value (only time value—to be explained shortly). If the stock price is above the strike, the warrant has intrinsic value and is said to be in-the-money.
  • Time value: Time value can be considered as the value of the continuing exposure to the movement in the underlying security that the warrant provides. Time value declines as the expiry of the warrant gets closer. This erosion of time value is called time decay. It is not constant, but increases rapidly towards expiry. A warrant's time value is affected by the following factors:
    • Time to expiry: The longer the time to expiry, the greater the time value of the warrant. This is because the price of the underlying asset has a greater probability of moving in-the-money which makes the warrant more valuable.
    • Volatility: The more volatile the underlying instrument, the higher the price of the warrant will be (as the warrant is more likely to end up in-the-money).
    • Dividends: To include the factor of receiving dividends depends on if the holder of the warrant is permitted to receive dividends from the underlying asset.
    • Interest rates: An increase in interest rates will lead to more expensive call warrants and cheaper put warrants. The level of interest rates reflects the opportunity cost of capital.

Uses

Warrants can be used for Portfolio protection: Put warrants allow the owner to protect the value of the owner's portfolio against falls in the market or in particular shares.

Risks

There are certain risks involved in trading warrants—including time decay. Time decay: "Time value" diminishes as time goes by—the rate of decay increases the closer to the date of expiration.

References

External links

Interactive Brokers | Stock Warrants

February 24, 2019
Dudley Pierce Baker

 

 

 

Interactive Brokers is my go-to brokerage firm as they will execute trades in the United States or Canada as well as other exchanges in the world.

Many of the warrants trading on the resource companies and marijuana companies trade on either the Toronto Stock Exchange (TSX), the Toronto Venture Exchange (TSXV) or the Canadian Stock Exchange (CSE).

If I discover a warrant trading which is not yet in the Interactive Brokers system, I notify them and they add that warrant asap so that I and others can trade.

If you are a U.S. investor you may find your brokerage firm will not allow you to trade the Canadian securities (unless they have a U.S. assigned symbol). Most of the Canadian shares will have a U.S. assigned symbol and perhaps 80% of the warrants have an assigned symbol facilitating trading in the United States.

For me I don’t want worry about, will they or want they, handle my trades.

I know there are other firms, i.e., PennTrade which also has a great system and allows for U.S. and Canadian trading.

For more information on warrants, visit my website and download your Free copy of “The Stock Warrants Handbook, Your Personal Guide To Trading Stock Warrants”.

Good Trading,

Dudley

Has Gold Reached Upside Resistance Near $1340 – $1360?

Our research has indicated that precious metals should be setting up for a period of rotation and sideways trading over the next 20~30 days.  We issued a research post on January 28, 2019 warning that precious metals would be consolidated over a 30~45 day period before setting up for a massive upside price move, here.  This research was based on our Adaptive Dynamic Learning price modeling system and from our Adaptive Learning Cycles system.  We believe this research is still very valid and want to alert metals traders that resistance in GOLD can be easily identified near $1340-1360.

The Weekly gold chart, below, highlights the resistance channel that originates in 2016 and continues with multiple peaks in 2017, 2018 and now.  We believe this resistance will act as a price ceiling over the next few weeks before metals prices attempt an upside breakout as we suggested in our January 28 research post.

Pay attention to the Fibonacci downside projected price targets near $1270~1295.  These levels are very likely to be retested if the current resistance level holds.  In other words, gold prices rotate back to below $1300 on moderate price rotation over the next 30 days before attempting to break resistance and move higher.  Be prepared for a potential “washout high” price pattern setting up early this week.

We are still actively seeking a deeper price rotation/retracement in Gold/Silver before we initiate any new trades.  We believe the upside pricing pressure has reached a level that will prompt a move back to below $1300 on healthy price rotation.  If we are wrong, we will know soon enough.  If we are right, then the momentum rally setup that will occur near or below $1300 will be a great trading opportunity for all investors.  Follow our research to stay informed of this future price movement.

We believe 2019 and 2020 will be incredible years for skilled traders and we are executing at the highest level we can to assist our members.  In fact, we are about to launch our newest technology solution to better assist our members in creating future success.  Visit www.TheTechnicalTraders.com to learn more.

Chris Vermeulen
Technical Traders Ltd.
www.TheTechnicalTraders.com

How to trade with warrants | Futures Magazine

Editors Note:
This is a re-visit of an old, yet timeless, article on stock warrants. Nothing has changed with warrants and the opportunities are endless as we now have warrants trading in all industries and sectors including resources, marijuana/cannabis, pharmaceuticals, biotechnology, etc., some with expiration dates of 5 years or more.

My contact info which was on Futures Magazine in the original article has changed, but otherwise, all is correct.

Read the entire article on Futures Magazine or below:

Many traders are familiar with call options and have spent many years and study hours learning strategies to employ them in the markets. Warrants, however, are still a little known and little-understood investment vehicle, even after 80 years of availability. In 1949, Sidney Fried wrote “The Speculative Merits of Common Stock Warrants.” In it, he captures the profit potential of these instruments.
He states:

“Common stock warrants turn in the most spectacular performance of any group of securities…. The speculative potentialities of common stock warrants are enormous…. With potential profits and potential losses so great it is a source of wonder that so little understanding of the nature of common stock warrants exists not only among the investing public who might be forgiven this sin, but even among the many professionals of the business upon whom the public depends for information and guidance.”
Sidney Fried’s observation in 1949 remains relevant today. Most investors and analysts do not take the time to understand the potential leverage — and the consequences — that warrants can bring to a portfolio.

Here, we’ll take a closer look at warrants from the trader’s perspective, compare them to call options and discuss when call options or warrants would be the most appropriate investment vehicle to accomplish a particular objective.

WARRANTS VS. OPTIONS
A warrant is a security issued by a company giving the holder the right, but not the obligation, to acquire the underlying company’s shares at a specific price. That right expires on a specific date in the future. Generally, warrants are issued in connection with a stock or a bond offering. Frequently, they are done so in the context of an “equity kicker” or “sweetener.” The reason a company will issue a warrant is simple; think of it as additional incentive to get the deal done.

There is an obvious similarity to call options. The two instruments are closely related. The major difference is that a call option is created in the marketplace by investors and not issued by a company. Typically, options trade on designated options exchanges, such as the Chicago Board Options Exchange. Warrants will trade on a traditional stock exchange, such as the New York Stock Exchange or the Toronto Stock Exchange, just like their common shares.

Warrants first came about in the 1920s. At one time, even AT&T had warrants trading, as well as some of the big company names of the past and present: Tenneco, Avco, Holiday Inn, International Tel & Tel, Lowes, General Tire & Rubber, Mack Trucks and many more.

Fast forward to today, and you will discover that many warrants are issued on the shares of natural resource companies, an area in which many traders have a special interest because of the commodity boom. Many companies that offer warrants trading are involved in the extraction and processing of gold, silver, oil and gas, uranium, coal, zinc and copper.

To name a few, you will find Goldcorp, Kinross and Silver Wheaton with warrants trading, as well as call options.

TRADER OBJECTIVE
The first step in warrant trading is selecting the right underlying company. This is of utmost importance because if the company does not execute on its business plan and the common shares do not rise, holders of either call options or warrants will not make money. Each investor must perform his or her own due diligence on companies that are attractive for investment.

The next consideration is time horizon. Once a viable company is selected, the decision to purchase a warrant or a call option will depend on the timeframe of the trader’s goals. While traditional call options generally have a life of between 30 days and one year, warrants often are issued with five years or more until expiration. Thus, short-term traders may see more opportunity in call options, while longer-term investors may be more comfortable with the several years until expiration that warrants provide. This additional time can be a great asset in the volatile markets we have experienced over the last two years.
Whether the investor is considering call options or warrants, the underlying reason is basically the same: increased leverage. Both warrants and options offer additional leverage over purchasing a stock outright. Of course, as with all forms of leverage, the leverage afforded by warrants cuts both ways.

When it comes to warrants, traders can expect to achieve at least a two-to-one leverage over purchasing the common shares; this is reasonable with most of the warrants currently trading. What this means is if you believe the common shares will rise 100%, then the warrants have the potential to increase by at least 200%.

WARRANT EXAMPLE
One stock that has attracted a lot of attention in the mining sector is Agnico-Eagle Mines. Focused on gold, with operations in Canada, Finland and Mexico — and additional development activities in the United States — Agnico-Eagle Mines benefits from significant international exposure. Its LaRonde Mine in Quebec is Canada’s largest operating gold mine, measured by reserves. Not surprisingly, the company’s stock has risen significantly along with the price of gold, and its warrants have been similarly popular.

The company trades under the symbol AEM on the NYSE, as well as the TSX. For several years, AEM had a long-term warrant trading, but it was overlooked by most investors and analysts. The warrant traded under the symbol AEMLW in the OTC market.

To see how the leverage of this particular warrant can amplify returns, go back to 2006-07. Each warrant entitled the owner to purchase one share of Agnico-Eagle common stock at $19 until Nov. 14, 2007. By then, the warrant had been trading for several years.

From the stock’s low on June 13, 2006, to the close on Oct. 12, 2007, it rose from $26.02 to $54.68, a rise of 110%. The warrant rose from $10.86 to $35.75, for an increase of 329%, providing the warrant trader with three-to-one leverage over owning the common stock. Investors privy to the warrants trading on Agnico-Eagle made an incredible gain on these warrants in a rather short period of time. Of course, if an investor had purchased call options during this period of time, they also would have made a significant profit.

A few other examples of warrants with great leverage returns in the last few years are Kimber Resources (6.1-to-1 leverage), Peru Copper (10.4-to-1 leverage) and Blue Pearl Mining (2.8-to-1 leverage).
Sometimes, it’s argued that warrants have a dilutive affect on the company’s capital structure and that investors should avoid them. From an accounting standpoint, the warrant is already issued. It is already trading on the market, and its effects are already in place. Interested investors are only taking advantage (if they desire to do so) of the leverage opportunities that the warrant furnishes.

In addition to speculative opportunities, warrants also provide hedging benefits. When combined with both put and call options, warrants also can be used to construct some rather interesting, sophisticated and potentially profitable trading strategies.

About the Author

Dudley Pierce Baker is the Guadalajara/Ajijic, Mexico-based founder and editor of Junior Mining News and Common Stock Warrants, (formerly Precious Metals Warrants). His e-mail address is support@commonstockwarrants.com

The History Of Stock Warrants

Warrants have literally been available for investors for many decades but yet are very under appreciated and overlooked by most investors.

As far back as the 1920s many large companies have had stock warrants trading, AT&T, Goldcorp, Bank of America, General Motors, Ford Motors and Agnico-Eagle Mines, among hundreds and hundreds of others.

My extensive knowledge of warrants goes back to the 1970’s and my fascination with the writings of Sidney Fried and The R.H.M. Warrant Survey, a hard copy newsletter and a popular financial newsletter during the 1950s, 60s and 70s. (Fried, 1949) Sidney Fried passed away in 1991 at the age of 72 and to the best of my knowledge, his service stopped in the late 1970s or early 1980s around the time that options began to trade on the CBOE.

Sidney Fried’s first book, ‘The Speculative Merits of Common Stock Warrants’ (1949) is a rare and timeless educational tool for warrants and is the core of knowledge used by me in my service. Since 2005 I have used this cumulative knowledge of warrants which I learned from the ‘master’ to educate and assist investors around the world and I have collected all of the writings of Sidney Fried. Even though these works are old, the information is timeless and only the examples used are out of date.

One quote from Sidney Fried which I have used many times at investment conferences is very appropriate here:

“With potential profits and losses so great it a source of wonder that so little understanding of the nature of common stock warrants exists, not only among the investing ‘public’, who might be forgiven this sin, but even among the many ‘professionals’ of the business upon whom the ‘public’ depends for information and guidance.”

In the very popular and highly recommended book, “The Coming Collapse of the Dollar and How to Profit from It” by James Turk and John Rubino, they discuss options and LEAPS as a possible avenue for investing in the mining stocks. They did not discuss our third possibility, warrants, which I feel is more “investor friendly”. Why?  Because of the all-important element of TIME.  How many times have your options expired worthless but yet within a few months or so your stock goes up; you just ran out of TIME?

If you would like more information on stock warrants visit my website.

Dudley Pierce Baker
Editor – Founder
http://CommonStockWarrants.com