Recent Buy – Pan American Silver Corp

Whenever I make a purchase, I like to share my buys to document my journey towards financial independence. This latest purchase diverges from the normal buys that I normally pursue, as I shared in this post – Multipronged Approach to Investing. So far, I have relied on companies with growing dividends, but the current market leaves me nervous wanting me to look elsewhere. I started to look at contrarian trades and looking for undervalued assets and decided to make further moves in this space.

Last week, I shared my first move in the precious metals space with a purchase of Silver Wheaton Corp (SLW.TO) (details here). Continuing with the theme, this time I am directly targeting a mining company. Investing in precious metals can take many forms and I have discussed some methodologies here and here. To recount from those articles, investors may choose to invest using bullion (comes with ownership/storage costs), ETFs (paper contracts, loses the point of investing in precious metals) or mining companies (comes with risk, such as exploration risks, management issues, lack of understanding space etc).

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Looking for Gold

Earlier this week, I posted an article on gold as an alternative form of investment. Gold is one of the oldest and most popular forms of investments and has proven to be an excellent hedge against inflation. In that article, I discussed a few different vehicles that one can use to invest in gold. One of the methods is to invest by buying equity in gold mining  companies. This article looks at the beaten down sector, where some truly great value finds can be uncovered.

Why Gold?

Before we go into the details of which companies, lets first address what the role gold plays in this world. It has been touted by many as a useless barbaric metal that does not serve any purpose. I have to respectfully disagree with such comments as gold has proven to be the safe haven everyone runs to, when shit hits the proverbial fan. In a loose monetary policy environment where asset bubbles are inflated everywhere you look, we are stumbling on the verge of one catastrophe to the next. It is just a matter of time before we hit a new financial crisis.

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