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Gold Mining Stocks

For investors who are familiar with the stock market, owning shares of gold mining companies is a convenient way of gaining access to the gold market.

While generally, the price of the stock correlates with the price of gold, other factors such as the company's operating strengths, management's competence and future growth prospects also affects the stock price. The price of the stock can also suffer due to events such as strikes by the mine workers.

An important detail to take note of when investing in gold mining stocks is how much of the company's future production has been hedged. A gold producer with a substantial proportion of future production hedged will not benefit as much as an unhedged producer if gold price goes up signifcantly. Conversely, should the price of gold drops sharply, the unhedged producer will suffer a greater drop in earnings (and possibly even losses) when compared to the company whose production is substantially hedged. While unhedged gold stocks offers greater leverage, hedged gold producers offers more stability.

Besides capital gains, ownership of mining stocks also let the investor earn a dividend. In the long run, the dividend will also rise along with the price of gold.

Buying shares of gold producers is another popular way of participating in the gold market.
Buying shares of gold producers is another popular way of participating in the gold market.

Major Gold Mining Companies

You can buy or sell gold mining stocks through a standard brokerage account such as Zecco. You can trade stocks for free on Zecco.com. The Free Trading Community. www.zecco.com