Gold ETFs: Bullion or Mining Stocks?
March 20th 2012 at 10:45am by John Spence
Gold miner shares continue to lag the precious metal’s price as bullion-backed exchange traded funds have made it much easier to invest in physical gold.
The rising popularity and ease of investing in gold ETFs has likely diverted money away from miner stocks. [Gold Miner ETFs May be Near Turning Point]
“Gold ETFs are designed to move in tandem with the price of bullion as each share of the fund is backed with metal. Shareholders of producers, by contrast, may suffer the effects of mining accidents, cost overruns, asset writedowns or broader stock market swings,” according to a recent Bloomberg report.
Gold miner ETFs have also been much more volatile than bullion prices.
“Why should you be looking at mining stocks when you have geopolitical risks, labor problems and rising-cost issues?” said Donald Selkin at National Securities Corp. in the Bloomberg story. “I would prefer owning gold and exchange traded funds as I do not have to worry about anything else beside prices.”
Market Vectors Gold Miners ETF
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