Gold stocks Vs Gold Bullion two different invesments
Many investors believe their portfolios have exposure to gold stocks and precious metals because they hold stocks in mining companies. Bullion and mining stocks should be viewed as two different investments. But as a safe haven, no gold,sliver or platinum mining stocks.
While mining stocks can provide attractive returns, they simply do not have the same risk-reward relationship or non-correlation to traditional financial assets as an investments in physical bullion. Physical bullion in allocated form is the lowest risk way to invest in precious metals. Unlike mining stocks, bullion is not subject to changes in production costs, management skills, availability of financing or exploration success. Allocated physical bullion provides the investor with unencumbered ownership because there is a huge difference between owning actual gold and owning a paper proxy such as an ETF or certificate.
Mining Stocks and Bullion are entirely different asset classes. During a rising trend, gold stocks are entirely different asset classes. During a rising trend, mining stocks are often correlated to the metals. Investing in gold stocks could see you investing in publicly traded gold mining companies. Buying shares in a gold mining company allows you to take advantage of the companies increased profit, due to the higher demand for gold. Gold prices are driven by supply and demand, and when economies are uncertain, the increased buying of gold drives the price up. Any gold mining company will benefit from the increased demand and price of gold. This may see the gold mining company's earnings increase, which would push its share price up on the market, thus making gold stocks very lucrative.