Gold & Silver Warrants: An Insider’s Insights

By: Lorimer Wilson

With a tsunami of seductiveness in a destiny prospects of bullion and china mining companies (and their batch prices as a result) we am edition an updated chronicle of my one-of-a-kind exclusive index of commodity-related companies with long-term warrants (CCWI) and a sub-category of usually bullion and china companies with long-term warrants (GSWI). This essay gives we some insights into a ‘secret world’ of warrants and slices and dices a make-up of both indices identifying a voters of any for your edification.

The “wee universe of warrants” is so singular that a voters have traded underneath a radar of roughly all investors. Indeed, in past articles we have finished anxiety to this zone as a “secret” universe of warrants.

As of a tighten of business on Nov 30, 2011:

• there were 151 warrants listed on TSX/TSXV (98 and 53 respectively)
• 105 of those 151 warrants (i.e. 70%) are compared with commodity-related stocks, incompatible supports and businessman banks
• 38 of those 105 warrants have a generation of 24+ months generation before expiry, i.e. long-term (LT), that is deliberate a smallest investment term
• those 38 LT warrants are compared with 34 opposite companies (4 companies have dual warrants each)
• 20 of those 34 companies are concerned in a mining, scrutiny or kingship aspect of a business
• 14 of a 34 companies are concerned in bottom metal, oil and gas and rural business pursuits.

Warrants: A Definition

A warrants is a confidence that gives a hilt a right, though not a obligation, to acquire a underlying (associated) confidence during a fixed (i.e. practice or strike) cost and within a specified generation of time (i.e. tenure or duration).

The Commodity Companies Warrant Index (CCWI)

The 38 LT warrants of a abovementioned 34 companies are all enclosed in a exclusive equal dollar-weighted Commodity Companies Warrant Index (CCWI) that we have been maintaining, essentially for personal use, over a past 6 years.

Surprisingly to many financial writers and financial advisors/planners not all warrants are compared with penny bonds – a ‘juniors’ – nonetheless they do comment for 85% of a sum as a dermatitis by marketplace capitalization shows below:

• 4 are large-cap companies (i.e. $2.5B);
• 1 is mid-cap (i.e. $500M – $2.5B);
• 2 are small-cap (i.e. $250 – $500M;
• 10are micro-cap (i.e. $100M – $250M);
• 17 are nano-cap (i.e. $100M)

In addition, while a infancy of warrants are compared with companies concerned in some aspect of changed metals activity (58%), other commodity-related companies also have compared warrants as shown below:

• 20 of a companies are bullion and china compared (22 warrants);
• 8 are concerned in bottom steel mining (9 warrants);
• 5 are in oil and gas operations (6 warrants);
• 1 is cultivation related

All warrants have life durations and start to remove value as they proceed their particular expiry dates. As such, usually warrants with during slightest 24 months tenure before expiry are enclosed in this analysis. The relapse by generation of a 38 warrants is as follows:

• 2 of 60+ months duration;
• 11 of 48 – 59 months duration;
• 14 of 36 – 47 months duration;
• 11 of 24 – 35 months duration

The Gold and Silver Warrants Index (GSWI)

As a sub-component of a CCWI a LT tradable warrants of a 20 companies essentially concerned in bullion and china mining, scrutiny and kingship tide attempts have been collected together into an equal dollar-weighted exclusive index named a Gold and Silver Warrants Index (GSWI).

Market capitalization of a 20 companies with LT warrants is as follows:

• 4 are large-cap
• 4 are mid/small-cap
• 12 are micro/nano-cap in size

Type of activity any association is concerned in is as follows:

• 11 are producers,
• 7 are explorers (i.e. juniors),
• 2 are kingship tide companies of which
• a) 1 deals exclusively in gold;
• b) 1 deals in bullion and china and other commodities.

The relapse of a months until expiry for any of a 22 warrants is as follows:

• 2 have 60+ months duration;
• 6 have 48 – 59 months;
• 11 have 36 – 47 months;
• 3 have 24 – 35 months

Index Constituent Companies

The voters of a GSWI sub-component and a whole CCWI are as follows with a vast top companies underlined for easy identification:

a) Gold and Silver Warrants Index (GSWI) Constituents

1. Agnico-Eagle (warrant expires in December)
2. Armistice Resources
3. Astral Mining
4. Bridgeport Ventures
5. Brigus Gold (2)
6. Crocodile Gold
7. Dundee Precious Metals
8. Endeavour Mining
9. Franco-Nevada
10. Golden Minerals
11. Gran Colombia
12. Kinross Gold
13. Lupaka Gold
14. New Gold
15. Northquest
16. Primero Mining
17. Rio Novo Gold
18. Sandstorm Gold (2)
19. U.S. Silver
20. Vista Gold

Below are a 14 commodity-related companies with LT warrants that are concerned in oil and gas operations, cultivation and bottom steel mining and/or scrutiny that finish a full element of voters in a CCWI:

b) Oil and Gas Constituents

1. Compton Petroleum
2. Manas Petroleum
3. PetroAmerica Oil (2)
4. Petromanas Energy
5. Petro Magagdalena Energy

c) Agricultural Related Constituents

1. Prima Colombia Hardwood

d) Base Metals Constituents

1. Formation Metals
2. Lipari Energy
3. Mega Uranium
4. Noront Resources
5. Oceanic Iron Ore (2)
6. Pacific Coal Resources
7. West African Iron Ore
8. Zasu Metals

Which Warrants Should You Invest In?

Warrants perform in attribute to that of their compared batch so their squeeze should not be finished but substantial research.

a) Given a fact that no aver ETFs are accessible to buy we could buy a basket of warrants consisting of an equal series of warrants from any association mentioned above. For example, if we were to shorten your warrants portfolio to usually those of bullion and china companies, and usually 100 warrants of any LT offering, it would volume to approximately $8,000 during today’s prices and elect expenses.

b) You could do your possess due industry of any of a 34 companies and confirm that association or companies are to your fondness and squeeze their compared warrants accordingly. (Read Gold Silver Warrants: What are They? Why Own Them? How are They Bought Sold? to learn accurately how to go about fixation orders to buy and sell warrants – and most more.)

c) You could shorten your preference of companies early on by:

1. management experience/reputation;
2. industry zone (oil and gas, changed metals, bottom metals, etc.);
3. specific products (gold, uranium, wanton oil, etc.);
4. business importance (producers, developers, explorers or kingship payers);
5. market capitalization (large, mid/small, micro/nano);
6. countries of operation (world-wide, excl. Africa, excl. Venezuela, etc.);
7. stock /company fundamentals;
8. technical investigate of stock;
9. expiry date of warrant;
10. price sensitivity of stock/warrant;
11. degree of liquidity of stock/warrant;
12. trading abyss of stock/warrant;
13. currency in that stock/warrant trades

Conclusion

Now we some insights into a ‘secret world’ of warrants and those really few companies with LT warrants that make adult a voters of a dual indices of that item class, a CCWI and GSWI. To keep sensitive of changes on a weekly basement allow here or come behind here to review my year-end news on new additions/deletions to, and a annual opening of, a dual indices.

Please feel giveaway to share a essence of this essay with your financial advisor. It will be a explanation to him/her and infer to be useful as a commodity bull, quite in bullion and silver, unfolds in a years ahead.

Lorimer Wilson is editor of www.munKNEE.com (Your Key to Making Money!), publisher of a daily FREE Financial Intelligence Report which can be subscribed to here and a visit guest writer to www.PreciousMetalsWarrants.comwhich also offers a FREEnewsletter (sign up here) and a subscription use (see details here).