Dudley Baker: Gold Junior Warrants to Provide Huge Leverage in Coming Bull Market
Dudley discusses stock warrants and why companies decide if they want their warrants to trade publicly. Many investors are ineligible for private placement, but there are still opportunities for them to trade warrants. His service has a database of private placements and tradable warrants from several industries.
Currently, he owns a couple of producers but has concerns about the potential for mine closures due to quarantines. Gold is rising, but many mining stocks are in decline due to these risks. This virus situation needs to be resolved quickly as the consequences could be disastrous.
Until recently it looked like gold would steadily head for new highs and miners would take-off and then this crisis hit. These events are hard to predict, and this one came so quickly that most investors were caught off guard.
Ultimately resource investors will be in the right sector as it’s just a matter of time. Start looking for opportunities as many shares are on-sale right now.
Our gut tells us that in today’s markets, gold should do incredibly well. We need market psychology to kick in like has occurred many times in the past. It’s like a switch gets flipped, and a rip-roaring bull market takes off.
If your new to this sector you may get quite queasy. However, there appear to be great opportunities, but we won’t know for absolute certainty until we sell. It’s possible that once the world gets past this crisis, this sector may become even more spectacular.
“With all the money printing and all the havoc, I have to believe that we are going to be in the sweet spot… and that we are going to be in the place to be, we have to stay patient.”
Talking Points From This Week’s Episode
• Publicly traded stock warrants vs. private placements
• Mine closures in a rising gold environment.
• Calculating valuations of warrants.
• Optimism, volatility, and market timing.
Time Stamp References:
0:40 – Obtaining warrants.
3:10 – Juniors, pandemic and mine closures.
7:10 – Warrants and market timing.
10:00 – Determining when to sell.
17:25 – Calculating leverage on warrants.
Dudley Baker is the founder and editor of Common Stock Warrants and its predecessor, Precious Metals Warrants, and is a 1967 graduate of St. Mary’s University in San Antonio, Texas, with a major in accounting.
Mr. Baker has 40+ years of accumulated knowledge and experience in trading stocks, options, leaps, futures, options on futures, and of course, warrants.
In March 2005, he founded and launched Precious Metals Warrants. This investment Market Data Service provided the detail on all mining and energy company Warrants trading on the U.S. and Canadian Exchanges. As an investor, he could not find this information and thus proceeded to accumulate data and built a user-friendly website to list the details on all mining and energy company warrants trading.
Dudley originally from Texas currently resides along the shore of Lake Chapala in Ajijic, Mexico, which has been his home since 1999. He says, “Living outside the United States gives one a better perspective of the world situation, the U.S. Dollar and investing.”