Sitting On a Penny Share Goldmine

Solomon Gold (LON:SOLG) jumped in value last week following a news of "significant copper and gold results" from early samples at the Levisivisi prospect.

I got out early feeling smug only to watch them go up and up. Smug had well and truly left the building as I questioned my decision to sell in the harshest tone possible. What made me sell and why? Time for a recap.

I guess you've been there too. The self-discipline approach of fixing sights on a sum and making it should have been enough. Why couldn't I have been happy with that?

The answer was probably greed for a few different reasons, but mostly because I imagined what I could have made instead of what's really in the bank. Reality check, consider myself slapped.

I keep trying not to be influenced potential gains based on last years figures, but it aint easy. Knowing what to choose and when to buy is part of it. Knowing when to sell is the next. Most recently for me it meant fixing in my mind on a return of 40% and moving onto the next share. As I dwell on it I wonder if perhaps it's time to raise the bar and take into account my research and embrace a little more risk for much higher returns being dug up in the coming months.

Every few weeks I see a sharp jump on my watchlist revealing another mining company producing good results. Each time I see it, I just can't help myself, it's where I want my portfolio to be. Now before we all take a sharp intake of breath and start preaching the benefits of being spread across different sectors consider this angle:


Discussing with a friend the risks of being focused on the gold mining sector threw up some interesting points as to the potential gains. As currencies get devalued, where do people start investing? His answer was gold. The underlying belief being: as governments pump money into their own economies at the risk of devaluing currency, will the result be higher demand for gold and minerals, hence investment in our small cap mining companies?

As always you take your own risks, I start out looking for an undervalued share that's under 10p using some chart analysis, then check the news reports and financials.

If bad news has hit the share price and I believe the company has a future, it's on my shortlist for this months investments.