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How To Buy Canadian Stocks and Warrants

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.

Allow me to first provide some insight on the mining sector and in particular the investment conferences being held frequently in both Canada and the United States.

The investment conferences in Canada are drawing thousands of participants. For example, last week I attended the conference in Vancouver, CA and there must have been at least 8,000 or so investors in attendance and standing room only for all of the speakers. As this was my first attendance at a Canadian event, I was in awe at the excitement and energy of those in attendance. Another conference to be held in Toronto, CA. in March is anticipating 12,000 – 15,000 participants. The resource conferences in the United States, i.e., Las Vegas, San Francisco and New York, are more on the order of 1,000 participants, begging the question;

Why the great disparity?

Two reasons in my opinion; lack of education in the United States on the natural resource sector and the perceived difficulty of investing in the Canadian stocks and/or warrants by U.S. investors.

Perhaps, U.S. investors are asking the question; why should I get excited about the Canadian stocks or warrants if I cannot buy them? Rather, most do not know how to buy them.

Also we know the average U.S. investor is still focused on the Dow, S&P and Nasdaq stocks and has little or no knowledge (as yet) of the great bull market taking place in the Canadian mining stocks and warrants.

With this background let me proceed to explain 'exactly' how to trade the mining stocks or warrants depending on your country of residence:

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 broker 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 the TSX 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 is taking place and will continue 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:

Some of the warrants also have been assigned a 5 alpha symbol by the OTC market but most have not thus requiring a little more work. 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, 2010 and you want to limit the price you pay in U.S. Dollars to $.50. Give your broker the specific instructions:

"I want to buy 5,000 ABC Mining Company warrants, cusip number - 123456789, expiring on January 5, 2010 at a LIMIT PRICE of $.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.

If your broker has previously refused your trades in the Canadian mining shares or warrants, I suggest you forward this article to them as it will be good for their business and rewarding for you with your new found investments.

If you would like additional information on 'how to trade' and also on warrants, we encourage you to visit our website.

 

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