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Charlie Don't Surf

Gold Vs Mining Stocks

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Just wondering what the pros and cons are with Gold vs Mining Shares. It strikes me that mining stocks are a little more leveraged, but still follow the same course.

Any recommendations as to how to invest in mining stocks e.g. the XAU. What I'd be really interested in is something that includes some silver as well.


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I too have been interested in this. I wanted to invest in gold, but wanted a bit more leverage (i.e. 10% of my portfolio in gold mining rather than 30% in actual gold, to give equivalent exposure)

The problem with mining stocks is that they are obviously very dependent on the individual performance of the companies projects rather than the gold price per se. If a miner performs badly, the stock falls irrespective of the gold price. However, if it does well, and especially if there is a coming gold bull market, the gains will far exceed those of actual gold.

Personally, to spread the risk of different miners, I've bought shares in a gold mining investment bank called Golden Prospect on the LSE (GOL). This company is split 50/50 between actual mining activities and an investment portfolio of several other mining companies. They reported a big profits last week and pay a dividend so I'm happy with them.

Otherwise, theres a unit trust run by Merrill Lynch called Gold & General which has performed quite well although I was deterred by its huge bid-offer spread.

You could buy shares in gold miners, there are quite a few on the LSE, perhaps a basket of 3 or 4 to spread the risk. If you want to buy actual gold, theres Gold Bullion Securities (GBS), which is the easiest way IMO.

Hope this helps :)

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