Hi Lou,
Do you think it is worth the gamble to invest in a small player like KWG or SPQ, and put it in a TFSA on the chance they may do well  and produce a tax free upside?
Thanks

Steve

Hi Steve,

I am glad that you see the opportunities with KWG Resources (KWG.TSX-V) and Spider Resources (SPQ.TSX-V) as a gamble and not as a speculation or as an investment.

These junior miners have a shared interest in a diamond play in Ontario and other unrelated mining projects that they are pursuing individually. These are not the types of companies that you want to bet the farm on. If you decide to invest in them you have to be willing to lose your money.

These are both classic penny stocks and I have looked at them from time to time for a number of investors. But the analysis has always come up the same.

Junior mining stocks can spend millions upon millions of dollars drilling and exploring but never actually open and operate a mine. The action in theses sorts of companies is always driven by the press releases that follow the reporting of drill results.

Not For The Faint Of Heart

The charts shows  the KWG and SPQ have rallied to $0.04 . In the case of KWG the total value of Thursday’s trading was $1,200 while for SPQ it was $25,600.  Not a ton of interest in these juniors on this particular day.

One thing you should always ask yourself when you are considering buying any stock is why do I want to own it?  You have stated that these two companies would be a gamble and that on the chance that they do well you might enjoy a tax free gain if you put the shares into a Tax Free Savings Account.

I am not sure that these are the best reasons to buy a stock. I would suggest that you continue to search for opportunities to make sure these are the best place to invest your hard earned money.

The Hard Way

Happy Capitalism!