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Mining Shares Confirm Bull Market For Gold

Mining Shares Confirm Bull Market For Gold

To me, the safest and steadiest way to invest in precious metals is to own physical gold and silver bullion coins, preferably in a tax-sheltered investment vehicle like an IRA. But that’s not to say I ignore what other gold bugs are up to. And it’s especially gratifying when these folks invest in ways that confirm the rising demand for gold. Mining shares confirm a bull market for gold.

That’s exactly the case right now with speculators that bought gold-mining shares at the beginning of the year. So far, the NYSE Arca Gold Bugs Index of mining stocks is up 81 percent year-to-date. That’s a nice supplement to (but not a substitute for) the nearly 17 percent YTD return on physical gold. If you already purchased the target 5 to 10 percent of your portfolio in physical gold, then you can certainly feel free to speculate on mining shares as well. But remember this: Gold mining shares are paper, and their value can be wiped out in a number of ways. For example, a country might decide to expropriate all the gold mines within its borders, making the stock worthless. In addition, if things get really rough, you won’t get far trying to buy food or ammo with gold shares, but it’ll be no problem if you own gold coins.

Another reason I prefer physical gold

Mining shares is that historically, the former has outperformed the latter. For example, the wonderful 2011 bull market in gold saw mining stock prices lag those of the metal itself, and the subsequent correction was much harder on the shares than on the metal.

Mining share performance this time is probably being boosted by better-managed companies, such as Newmont Mining and Barrick Gold, where costs have been slashed, output cut, new projects delayed and old, unprofitable mines sold. When you speculate in mining shares, you are exposed to extra risks beyond the price of gold, such as management mistakes, financial fraud, natural disasters, worker strikes, political instability and so forth. That’s why I would rather own the metal and not worry about all these other factors.

If you agree with me, don’t wait a day longer. Open an Augusta Precious Metals Gold IRA right now, and begin making tax-deductible purchases of gold and silver bullion that you can keep for the long term. You won’t find lower prices anywhere and we are proud of our reputation for honesty and transparency. Contact us today!

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