Your Questions About Invest In Gold Mining Companies

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George asks…

help with accounting?

Gigi Liken and Ron Bobo are organizing Gold Unlimited Inc. to undertake a high-risk goldmining venture in Canada. Gigi and Ron tentatively plan to request authorization for 75,000,000 shares of common stock to be sold to the general public. Gigi and Ron have decided to establish par of $1 per share in order to appeal to a wide variety of potential investors. Gigi and Ron feel that investors would be more willing to invest in the company if they received a large quantity of shares for what might appear to be a “bargain” price

Are gigi and ron acting in a professional manner?

financi4 answers:

Is this a real question that you need to answer for a class?

It sounds like an opinion question. The answer is that par value really doesn’t matter. It’s the market value that matters. Most common stock has a par value of $1, sometimes it is even less than $1. It can even be as low as $0.01 or sometimes there is no par value.

So, the answer is that they are acting in a perfectly professional manner. We don’t even know the market price of the stock, or the price at which they intend to sell the stock. That’s what really matters. But, I am sure that the company would need to be audited before they were allowed to sell publicly traded securities, so the investors can make their own decision as to whether the investment was good or not.

Michael asks…

Can someone help me with a question about stock?

Gigi Liken and Ron Bobo are organizing Gold Unlimited Inc. to undertake a high-risk goldmining venture in Canada. Gigi and Ron tentatively plan to request authorization for 75,000,000 shares of common stock to be sold to the general public. Gigi and Ron have decided to establish par of $1 per share in order to appeal to a wide variety of potential investors. Gigi and Ron feel that investors would be more willing to invest in the company if they received a large quantity of shares for what might appear to be a “bargain” price.

Is Gigi and Ron behaving in a professional manner?

financi4 answers:

Yes, they are acting in a professional manner.

Pricing their stock is very similar to performing marketing: They need to determine who their target “stock buyer” is and cater to their desires.

Thus, they may decide to price at it $1 per share to open it up to a wide audience. Their drawback is that at $1 per share they will probably have a TON of small stockholders. They will need to notify (via mail or other method) of their plans, earnings, etc.

They may also have problems with shareholder churn, as the shares may be bought & sold very rapidly (leading to a VERY quick spike up and/or down).

On the other hand, if they decided to price the shares at $1,000 each, they would not get many individual investors to buy shares. They would attempt to attract institutional investors and get just a few of them to buy shares. Catering to these institutional investors is different than marketing to individual investors.

Clearly professional, and rational.

John asks…

Why does american media hide the fact that WE MEXICO supply oil and other energy to USA?

I am tired on how so many people insult us mexicans? But the american media hides the fact that WE MEXICO is one of the major suppliers of oil to the USA. It is Canada and us Mexico that supplies Oil to the USA. But recently Canada has switched over to China.

And also in Northern Mexico………Mexico sells electricity to Southern California Americans.

Also, WE MEXICO are the world’s second largest supplier of SILVER and also have gold. Also there was a recent discover of Lithium but a Chinese Company is going to extract the Lithium in Mexico while the mexican land owners that live there are to be relocated!

Look up Canadian Miners in Mexico and you will see how many Canadian Mining Companies are in our Mexico!

We get called all kinds of racial stuff but people don’t notice the natural resources that foreign countries take from us Mexico and we also supply oil to the USA without political problems!

Also experts say that Northern Mexico is the world’s 3rd best location for solar energy. Mexico is going to invest in solar energy turning dormant land, into jobs and low cost electricity:

http://www.upi.com/Business_News/Energy-Resources/2012/03/29/Mexico-buoyed-by-renewable-energy-boost-aims-for-solar-project/UPI-59891333048596/

And with the recent discovery of a major deposit of natural gas in Northern Mexico…..we are going to build more natural gas pipelines to other parts of Mexico:

http://pipelinesinternational.com/news/mexico_to_invest_in_natural_gas_pipelines/064835/

So our energy needs in Mexico are going to be met on our own.

My point is that many of you that insult us mexicans are from countries that don’t even have any natural resources or energy to sell to the USA.

financi4 answers:

^ Lol scroto back just tell me what is so bad about having cheap labor?
And who are using all those ZOMG ILLEGAL DRUGS!!1!1!

James asks…

Hey this may sound stupid I’m 13 with 1500 dollers………?

I have a college fun which is full thanks to my grandparents + The pre-payed college program so I have ne school opened to me. I will continue to get money till my grand-parents pass away. I want to do somehting with my money I “manage” to pay for movies gifts and w/e else that isnt like a TV. My parents do not pay me I just happen to get money from friends….. umm I could probaly get around 500 hundred more in bout a month. I need to invest it though. What should I do with 2000 dollers? I guess I could keep it in the bank but it isnt generating any interest The Stock Market isn’t great and I havent had too much experience in it. I have heard reports on gold i think it is going down unless war/attack and silver will go up but Dont want to buy mining companies futures or silver itself. What should I do? Wait till the housing market falls and then buy then sell when it rises cause it can only fall so far idk I probaly sound stupid I’m only 13 with many other things on my mind

financi4 answers:

I’m 16 and right now I’d say, save that money. Either put it in the bank or invest it, but do not spend it right away. I’m 16 now and will be getting a job soon to buy a motorcycle. It would be nice to have that money available to me when I want it, and you will probably think the same thing later.

Robert asks…

stocks and shares from 16 year old?

hello everyone
im just her to ask – i have recently started trading and have saved up £2300
i have started investing and lost about £70 mehhh
so guys, I have plans to just invest in 2 stocks ,£1150 eac
the stocks are
YUM brands

AND

Vatukoula Gold Mines

(i hope you know about theses companies)
If you think this is a bad idea please could you suggest something better??
and don’t hate on the £2300 i worked all summer for that (im 16) and this i whati want to do career wise- THANK YOU!

financi4 answers:

What percentage of your portfolio is cash?

For example, imagine a hypothetical portfolio of $1,000 with a single stock and a target percentage of 50% is to be kept as cash. The portfolio starts off as $500 cash and $500 stock, the stock drops in half so you then have $500 cash and $250 stock, you rebalance back to the target 50% so you have $375 cash and $375 stock, the stock bounces back to it’s original price leaving you with $375 cash and $750 stock for a portfolio of $1,125 but the stock price is only where it first started.

So long as you maintain a percentage of your portfolio as cash then there’s always something you can do in response to a major market move. If you’re fully invested, then your portfolio value is just swinging in the wind and there’s nothing you can do except watch.

Another thing is that every investment involves risk and unless there is zero risk, you should not have your complete portfolio at risk. For example, imagine you had a specially weighted coin that would flip heads 90% of the time, and when it flipped heads, you doubled your money but when it flips tail, you lost your wager. How much of your money should you wager on the toss? The more you wager, the more you stand to gain but if you wager everything that you have with each toss you will eventually lose everything. It turns out in this situation that the optimal percentage of your net wealth to invest for maximizing the log utility of wealth would be 80%. If the coin flipped heads 60% of the time, the optimal fraction of your wealth to wager would be 20%. It’s safer to be below this optimal fraction then above so unless you are absolutely certain of your investments which you never can be, you should always have some of your portfolio in cash.

Now you have to consider the cash in your portfolio as part of the investment, it’s not cash in your pocket for you to spend. It’s not even cash that you can tap and replace later cause you’ll never get around to replacing it. It’s cash that justifies the risk you are taking with the stock that you buy. If you can’t reserve that cash then you can’t afford that stock.

The geometric expectation of outcomes when you are fully invested is zero (as opposed to the commonly taught arithmetic expectations) which means you can expect to eventually lose it all if you take an all in or all out approach. Only 10% of the business schools teach the geometric methods as they originated with mathematicians, physicists and engineers, not with economists but the geometric techniques which date back to Bernoulli in the 1700’s have proven themselves in many fields and indeed are the equations behind digital telecommunications.

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