In a
mortgage, six per cent. is wisdom; in a mining return, it is
folly. A mine, instead of being figured on the basis of a
mortgage, ought to be figured on the basis of a term annuity.
That is to say, on the basis of a wiping out date. When the mine
is done paying dividends, there is no return of the face of the
principal invested. Yet the great and gullible public forgets
this all-important fact, which differentiates mining from every
other form of business.
CRACKER-BOX INVESTORS
There is every probability that the average investor never heard
of a proper "amortization charge" in the management of a mine.
Until he shall have heard of it, until he shall have learned
something of the terms of life annuities, he ought never to
invest a cent in any mining stock. After he actually has learned
the theory of amortization, he will observe that ALMOST EVERY
MINING STOCK LISTED IN PUBLIC PRINTS IS SELLING AT AN INFLATED
VALUE. That is to say, even the best and most stable of mines are
overrated, not to mention the purely wildcat ventures. Some mines
may naturally be long-lived, others short-lived; yet, if either
pays a good, stiff dividend, THE PUBLIC MAKES NO DISTINCTION
BETWEEN THE TWO and will buy the stock of either.
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