Stick with Physical Gold Over Mining Stocks

Gold is sure acting like it’s trying to break out. As of April 13th, 2017, gold was at $1,287 spot price and an trading at high of $1,288 spot. As mentioned in a recent blog, uncertainty in geopolitical affairs is driving investors to flock to the yellow metal for a safe haven.
GoldThe more valiant investor may be thinking along these lines: if the physical commodity (gold) is hot, then investing in gold mining stocks may be a better way to get impressive returns on the dollar. If picking the right mining stock, you may be absolutely right. You may just break the bank. You could double or even triple your money if the stock you buy outperforms other stocks, or the gold market itself.
For example, some promising drilling results on its Orenada property have caused Alexandria’s stock to appreciate 43% in just the last month alone. It seems the company keeps butting up against high-grade gold every time it drills.
Mining stocks are noted for these kinds of spectacular returns when their respective commodities perform well. A problem arises though when gold corrects even just a little. After all, what goes up goes down. A small correction in gold can stimulate a big correction in a gold mining stock.
When buying gold coins, you buy a hard asset, which like any hard asset- real estate, for instance – moves up and down in market value. When buying stock in a mining company, you’re betting on management’s ability to deal with its own problems and challenges.
As gold goes on its merry way up or down, a mining company can undergo a strike, sudden unanticipated cost increases and gargantuan debt. If gold slips to $1,100, investors who bought gold coins at $1,287 would lose about 14.5% on their money. (Strictly speaking, they wouldn’t lose unless they sell).
When gold falls to $1,100, mine owners will have difficulty paying back their debt obligations, have troubles with insolvency and, therefore, survival. But when you hold the physical metal, you hold an investment for all seasons.
Are there advantages to investing in gold stocks? Absolutely! You could break the bank – or at least see a substantial return on your investment, providing gold moves quickly. When you invest in physical gold, on the other hand, you may not see the same impressive returns but you’ll always have protection against the paper assets in your retirement funds.
Request more information now or call 800-777-6177 now, and ask to speak to a Fortress Gold Group representative.

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