Fools Gold: Five Common Mistakes with Gold Investments

Fools Gold: Five Common Mistakes with Gold Investments by Merk Investments, Axel Merk ou want to own gold. Maybe you’re worried about the potentially detrimental inflationary effects emanating from the Fed’s and global central banks’ policies; maybe you’re worried that Y the fiscal cliff agreement is simply kicking the can down the road and fiscal Armageddon looms on the horizon. Whether you’re in search of inflation protection, a safe haven asset, or both, gold may be a part of the solution. Regardless of your reasoning, owning share price of a company: management, companies’ margins widen, ultimately the ultimate currency is not as cost pressures, mining diversification, increasing the bottom line. However, this straightforward as you might think. To stage of

the mining process, to name just theory is predicated on fixed costs staying help out, we’ve compiled five common a few. This problem is generally more relatively constant. Unfortunately, recent mistakes associated with investments acute for juniors than majors, because performance does not support this in the precious metal. Avoiding the juniors often have yet to “strike gold,” investment idea. Indeed, gold mining common pitfalls may help provide you therefore the stock price often trades more stocks, on aggregate, have significantly with the desired investment exposure like an option. Moreover, many mining underperformed the price of gold. The while minimizing any unanticipated companies don’t only mine gold, many reality is that mining is a highly energy- drawbacks. Ultimately, we hope the also mine silver, palladium, diamonds intensive undertaking, and therefore following list can help reduce investment etc. This dynamic also holds for baskets many of the costs are closely linked to headaches associated with your future of mining companies – baskets of miners energy prices, such as oil, which has also gold investments. have significantly underperformed the experienced significant increases in price. price of gold over recent years. As a result, many mining companies 1. Gold Stocks Ain’t Gold have not produced the anticipated A frequent mistake made by investors Some investors believe gold mining is to invest in gold mining companies stocks may provide more attractive (both juniors and majors) as a substitute investment exposure to gold than gold for gold. There are a couple of reasons itself. The investment thesis is as follows: why this may be a mistake. Firstly, gold gold mining companies are able to take mining company’s stock price does not advantage of an increase in the price precisely track the price of gold. That’s of gold through enhanced operational because lots of other factors influence the leverage; as the gold price goes up, mining MERK INVESTMENTS, LLC | JANUARY 2013 WWW.MERKINVESTMENTS.COM | PAGE 1 F o o l s G o l d : F i v e C o m m o n M i s t a k e s w i t h G o l d I n v e s t m e n t s high level of profits. Additionally, During periods of economic contraction Some listed exchange traded vehicles may governments may demand higher taxes or recession, silver also offer the option to take delivery and employees...

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