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Can Americans Really Buy The Canadian Mining Stocks?

We are of the opinion that the Canadian mining stocks are close to a spectacular breakout very soon and we think it timely to revisit one of our articles of a few years ago.

Are the potential gains only for Canadian investors?

Frequently I read comments from other analysts regarding the difficulties of trading, i.e. buying, the Canadian mining stocks. They usually suggest investors seek out a broker that specializes in these stocks and while that is not bad advice, it is not necessary to do so.

There is no secret code to be entered to play this game, it's just a matter of understanding a few basic rules and you will soon be a professional yourself.

Canadians:

The trading of the mining stocks and warrants will be very easy for you. The vast majority of mining companies are based in Canada and trade on the Toronto Exchange (TSX) or the TSX Venture Exchange. The symbols for the shares and warrants can be easily obtained and orders executed. The Canadians through their local newspapers have access to an incredible amount of news on the natural resource sector as this is where most of the companies are headquartered and also where a substantial portion of the world's resources are located.

Americans:

If you want to be included in this long-term bull market in the natural resource sector, it is imperative that you understand how to invest and have your orders executed.

For U.S. citizens do not be discouraged if your broker has previously told you they cannot execute your orders on the Canadian mining shares or warrants. In a few minutes of reading you will be an expert on this subject and will probably know more than your broker and I assure you they will execute your orders.

As a U.S. citizen, I have purchased hundred's of the Canadian mining companies and warrants using my U.S. discount brokers in the last few years and I will share with you 'exactly' how to place your orders, or if necessary, 'exactly' what to tell your broker.

For those specific mining shares you are following, I suggest you track your portfolio using Stockhouse or Yahoo Finance using the Canadian symbols and thus follow the Canadian prices, including the bid and ask price for each security.

Symbols for mining shares:

In order to place orders you need a symbol, right? Virtually all of the Canadian mining companies have been assigned a five (5) alpha symbol by the OTC market to facilitate these trades in the United States. The last character is an 'F' representing a foreign market. You will find the symbol (s) in numerous locations:

  • Your brokerage firm - symbol search
  • Yahoo Finance -- symbol search
  • Nasdaq -- symbol search

With these OTC symbols you can now enter your order online. Cautionary reminder: you may see a price for the most recent trade, but this is probably not the current price. Remember, the primary market for the Canadian stocks is on the TSX not in the U.S. The price you see using the OTC symbol will be the last trade (in the U.S.) which may be days, weeks or months ago. In other words, the stock could be actively trading on the TSX in Canada but not in the U.S. due to a current lack of knowledge and interest by U.S. investors as pointed out above. Do not be discouraged. Ascertain the current price of the shares in Canadian dollars, decide how much you want to pay for the shares (in U.S. Dollars) and enter your LIMIT ORDERS.

Some investors will no doubt give up saying, 'this is too difficult'. Let me remind you that this bull market will take place with or without you. The choice is yours whether to participate and it is essential for you to understand how to get quotes and place your orders.

Symbols for Warrants:

Many of the warrants trading have also have been assigned a 5 alpha symbol by the OTC market, if not then a little more work it required. In these cases, if there is a warrant you wish to purchase you will need the cusip number (a 9 digit legal identification) for this warrant. The cusip number can be obtained from the company and is but one of the many particulars on warrants which we furnish to our subscribers.

If there is an existing OTC symbol you may enter the order for the warrants online, otherwise, you will need to call your broker and give them the cusip number for the warrant.

Example:

Let's say you want to purchase 5,000 warrants on ABC Mining Company, the cusip number is 123456789, the warrants expire on January 5, 2011 and you want to limit the price you pay in U.S. Dollars to $0.50. Give your broker the specific instructions:

"I want to buy 5,000 ABC Mining Company warrants, cusip number - 123456789, expiring on January 5, 2011 at a LIMIT PRICE of $0.50 U.S. dollars." Your broker will read the order back to you for confirmation. Congratulations, you have just placed your first order for warrants.

Australian & U.K. Citizens:

Depending upon your brokerage firms, I suggest you can purchase the Canadian mining shares and warrants using the procedures discussed above for U.S. Citizens.

Concluding thoughts:

Commissions:

The commissions will vary depending on your brokerage firm and whether you can place your orders online or whether you must call your broker to enter the trade. While the amount of the commission should be considered, they are to me just an expense, overhead, of doing business. The potential gains to be derived from the mining shares and warrants over the coming months and years should over shadow your concern over commissions, in my opinion.

For those readers unfamiliar with our services:

  • PreciousMetalsWarrants.com provides an online database for all warrants trading on the natural resource companies in the United States and Canada.
  • InsidersInsights.com tracks the buying and selling of corporate insiders with a focus on the junior mining and natural resource sectors. Buy and Sell Alerts are issued as deemed relevant based upon our analysis.

We encourage all readers to sign up for our free weekly email.

 

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