The securities of public corporations the main business of which is to mine for gold bullion are often referred to as “gold mining stocks.” The Dow Jones U.S. Gold Mining Index is a stock market index that is a weighted average of about 100 of the largest and most widely held gold mining stocks trading on major American stock exchanges. When the price of gold bullion is rising, the prices of gold mining stocks are rising. Similarly, when the price of gold bullion is declining, the prices of gold mining stocks are declining.
There’s been plenty of talk around here regarding gold and whether the precious metal is heading for $2,000. In my view, the current global risk will support and drive gold higher. (Read “The Stock Market Event You Need to Guard Against Right Now.”)
For any gold investor, the question is whether to buy the physical bullion or gold mining stocks. If you like the idea of holding the actual gold, you can always fly to Dubai and buy the metal from the vending machines, like Michael outlined yesterday in his article. But for the average investor, I favor gold stocks over the higher risk of other commodity options.
An investment strategy would be to buy a mixture of exploration-stage gold mining stocks along with small to large gold producers. Under this scenario, you can play both the potential aggressive gains of exploration stocks and the steady returns of the large gold producers.
For investors interested in exchange-traded funds (ETFs), the SPDR Gold Trust ETF (GLD) is worth a look and is currently trading in a sideways channel, above the 50- and 200-day moving averages (MAs).
Chart courtesy of www.StockCharts.com
At the top of my list of gold stocks is Newmont Mining Corporation (NYSE/NEM); in my view, Newmont is one of the best stocks in gold, because this stock will generate value for your portfolio for years to come. I’ll go even so far as to say that this stock is the only one you will need to own for the next decade, with its good price appreciation potential and dividend.
Missing its earnings-per-share (EPS) estimates in three … Read More
The growth in manufacturing in the U.S. has been flat. Despite this, the Empire State Manufacturing Survey noted that input costs—oil and commodity prices for manufacturers—has risen steadily over the last few months, with February’s high level not seen since the summer of 2011…more rapid inflation (source: Federal Reserve Bank of New York).
Import prices of goods to the U.S. rose 0.4% in February and, although higher oil prices can be blamed, goods and services imported from overseas also contributed to the rise. From a year ago, import prices have gained 5.5% (source: U.S. Labor Department)! More rapid inflation.
In China, their latest Purchasing Managers’ Index for March showed that their input costs (cost of goods) were flat, but that inflationary pressures remained high (source: Markit Economics). The index noted that input costs—oil and commodity prices—have been rising over the last half of 2011; rapid inflation.
In India, their latest Purchasing Managers’ Index for February revealed that their input costs—oil and commodity prices—are rising at a historically rapid inflation rate. The rapid inflation rise in input costs has persisted for the last six months. As with China, both countries are increasing their prices to compensate, which is why import prices in the U.S. or these goods and services are higher.
In Europe, their March Purchasing Managers’ Index revealed the steepest rise—again, rapid inflation—in input prices since the summer of 2011 (sound familiar?). The inflation rate recorded matches the highest long-run average in its 14-year history!
Just so readers don’t get the wrong impression that it is just the troubled nations in Europe experiencing rapid inflation,Germany’s Purchasing Managers’ Index also reported … Read More
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