In this
investing, the public has no protection on the part of the
government, on the part of honest publicity, or on the part of
its own careful education.
In the MAJORITY of cases, a mine ought to pay annually perhaps
twenty per cent. of the investment, to be profitable. That is to
say, the actual value of any mine is rarely over five times
actual dividends paid after expenses of operation. How many mines
are capitalized on any such real basis as that? The answer lies
in our own ignorance, and in the shrewdness of the men who sell
us mining stocks. Stocks that are the best dividend-payers often
sell at TEN or TWELVE times the face of the annual dividends. Let
the mine hit a brief streak of bonanza, and the stocks will climb
yet higher. We buy such stocks, or worse; but even a fundamental
acquaintance with the theory of mines would show us that such an
investment is usually a bad one. In a mortgage we do not look to
the interest to pay us back our principal; in a mine we MUST look
to DIVIDENDS to pay us back our PRINCIPAL AND INTEREST also. When
the mine is done, our principal is gone. But how many mining
investors ever thought of that? And how many, when offered a ten
per cent.
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