Gold mining shares

Royalties, mining & prospecting

One of the oldest ways to invest in gold has been using gold equities. Investors have been able to buy a range of shares ranging from: gold miners, gold royalties firms, gold explorers and gold prospectors. Using gold shares to buy gold does require expert stock picking and has been criticised for its:

  • Exploration and extraction risk
  • Country/jurisdictional risk
  • Company specific risk (e.g. – management quality)
  • Vulnerability to energy and input costs
  • Exposure to exchange rate risk
  • Lack of dividend payments
  • Lack of correlation to the price of gold

So, are mining stocks the best way to buy gold?

Buying gold equities is quite different to holding a gold bullion investment, and requires high levels of specialist knowledge. Even few professionals are successful gold equity investors, showing just how tricky this method of gold investment can be. Investors with less research time and risk appetite tend to prefer to simply buy gold bullion and the live gold price.

How do I buy gold mining shares? You would need to use a traditional stock broker to invest in gold miners.

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