Gold mining shares are stocks of companies that are in the gold mining industry. These companies range from small exploration companies, to large multi-billion dollar companies that have large mines on a global scale. The smaller gold mining companies are a lucrative investment if the company can find a gold spot and mine it. Market Vectors Junior Gold Miners (NYSEArca: GDXJ) is an ETF that gives targeted exposure to this group. [Junior Gold Miners ETF Breaking Resistance, Beating Large-Caps]
A mining company can provide an investor with a good return on investment even when the gold price stays the same or falls in value. The value can be increased due to the payment of dividends or an increase in the production of gold. The advantage with a gold mining ETF such as the Market Vectors Gold Miners ETF Trust (NYSEArca: GDX) is that the fund can take off if the price goes up, however, if the prices suddenly fall, returns can disappear quick. [Gold ETF: Miners vs. Bullion]
SPDR Gold Shares
Tisha Guerrero contributed to this article.
Full disclosure: Tom Lydon’s clients own GLD.