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Can Gold Mining Stocks Be a Gold Mine for Investors?

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Gold Mining Stocks

Gold Mining Stocks Disappoint Some Investors

Gold prices continue to linger around heady all time highs yet gold mining stocks have not enjoyed the same wild degree of success.  Globally, new gold mines are cropping up such diverse places as China, the Philippines, India, Eritrea and Brazil yet the promised rich returns for investing do not seem to meet investor expectations.  

Buying gold mining stocks means you are investing in a process.  You put your money up because you believe that that company’s research, personnel, equipment, cash flow and plan will all work well enough together to produce a healthy profit for you as an investor.  But volatile times and the weak US dollar combined with economic strengthening in places such as China and India drive investors to snap up the precious metal instead of investing in the mining of gold. It’s easier than ever today to purchase gold.  Auctions, online sites and brokers can effortlessly sell the commodity to clients around the world.  Because of the ease of obtaining gold that one can hold in his hand, certain investors choose to bypass the option of purchasing gold mining stocks.  

 Research Gold Mining Stocks Before Investing

But let’s not throw out the baby with the bathwater.  Gold mining stocks can be a part of any diversified portfolio.  Track the five year performance of large gold mining and exploration companies such as Barrick Gold (ABX) and Goldcorp (GG) and you’ll see solid recovery and progress.  Many middle and junior companies have weathered the volatility of recent years and are bringing some excellent grade ore out of their mines.

Before investing in any gold mining stocks do your homework.  Go to the company site and read their prospectus, performance information and stock reports. Read to get acquainted with the owners and their vision for the company.  Learn about the host country and its political situation. Mines rarely produce only one ore so find out what other ores or minerals the company hopes to mine. Getting an idea of the big picture will help you make a well-informed decision. Investing in gold mining stocks, such as our recent play POTG, may still be a good choice for today’s investor.

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