How to buy Gold?

[mathjak107]

in my opinion while gold stocks are a play on gold they are still stocks and as such act like them.

they are still companies subject to earnngs reports,managment ,profits,strikes,political issues etc.

many many times gold stocks will fall while gold itself rises.

a mine strike in south africa had the ASA gold index of mining stocks plunging while gold soared.

2008 saw gold rise to new highs while the mining stocks fell like a house of cards.

i find gold stocks only respond well when the markets are doing well and golds rising .

your not paid 1 penny extra to wait in a gold stock like NEM that pays a dividend, as opposed to sitting with gold itself. its all about total return.

NEM with reinvested dividends is down ytd (-16%) ---- gold in gld is up 3.75
3YR NEM TOTAL RETURN 9.07% ---- GOLD IN GLD 64.72

5YR NEM 28.55 ------- GOLD IN GLD 136.70

while mining stocks have a part of them dependent on gold prices they are still stocks first and a play on gold 2nd and yielding very different results than the metal itself.

[mortimer]

Originally Posted by mathjak107

in my opinion while gold stocks are a play on gold they are still stocks and as such act like them.

No argument there on any of it.

If you chart the price of gold and the XAU over time, when gold it going up,
the stocks are going up more and when gold is going down the stocks go
down more. Often times, the stocks go down when gold is flat.

If you don't like volatility then the stocks are far worse than gold.

Earlier, the stocks had a lot of leverage to the price. When gold went up $50 on $500 gold,
that was 10%, but a producer making the product at $400 saw a 50% gain.

Now, with gold above $1,500 and production costs still around $500-600, you can see the leverage is quite small.

Still, I like to have more in the stocks. For producers with large reserves, a big move
in the price of gold makes the value of all that gold in the ground go up quite a bit.

Lighten up as they climb and load up after a fall. I think they are likely to mostly become 5-8% yielders from time-to-time.

[mathjak107]

it really depends if your buying gold as protection and a store of value or your buying it as a sector play and speculation.

gold is gold for protection and a store of value. no gold stock can lay claim to that.

but for a wild volatile ride as a quick sector play gold stocks can be like trying to time any other sector. getting paid to wait is really not a factor as you saw as you may wait so long for the ship to come in the pier collapses . even with dividends most if not all gold stocks failed to out perform gold long term..

[mortimer]

Originally Posted by mathjak107

gold is gold for protection and a store of value. no gold stock can lay claim to that.
even with dividends most if not all gold stocks failed to out perform gold long term..

Actually, my post was about the fact that gold miners are just now starting to pay dividends.

In your statement "even with dividends" ... you are talking about "even with" the 0.8% dividend which
was the best dividend being paid by American or Canadian miners just a little over a year ago.

Long-term, a basket of miners tracks gold pretty well.
Up until less than a year ago, no dividend from any minor was a factor.

If the miners continue to raise dividends and we start seeing companies that pay 5-6% yields - even
with the volatility - a retired person, looking for protection, but also needing yield, could buy these.

My original post was simply highlighting this. Things change.

Again, I have tracked the price of gold and the price of the stocks from 1983 to 2008
and there was no benefit to holding the miners unless you were doing some trading
and balancing. Since 2008, you are totally right, the metal has been far superior.

Things change.

One of the things that is changing is that China is buying, or trying to buy, resource companies - like gold miners.

Even if they don't own a substantial presence is US/Canadian miners, buying up others means the N. American miners will be worth a premium.

I trade a lot, but even for my 78-year-old mom, I keep some of her money in miners. Note that I said "some."

Also note that trading out at highs and in at lows does not mean trading even 1/2 of one's position(s).