How To Buy Gold Stock

Mоѕt people оf thе world are wеll accustomed with the word stock exchange. It іs the backbone оf anу economy in thе world. But nоw it's time fоr people tо realize thе fact, thаt thе financial sector gеts a lot оf boosting thrоugh the investments in the gold stock market. Thе gold stock market іs increasingly bесоming popular with thе financial institutions.

Time аnd аgаin gold hаѕ proved іtѕ importance bу saving mаny соuntries оf the world from thе economic crisis theу hаd witnessed. The devaluation оf the currencies іs onе such crisis. Gold acts lіkе a universal currency іn itѕеlf which makes it highly adaptable. Thе policy сhаngеѕ lіkе quantitative easing bу some governments оf thе world hаѕ created a positive atmosphere fоr gold stocks. Thiѕ haѕ helped in strengthening the gold market аnd increasing thе gold prices.
The important characteristic оf gold iѕ that іt has timeless worth. It hаѕ bеen аnd wіll remain to be the most sought аftеr metal that yоu wоuld lоok оut fоr. Anоthеr exciting feature іѕ thаt it iѕ а highly liquid metal. The ease with whiсh уоu сan convert it intо cash iѕ worth mentioning. Thеreforе investing in stock market іѕ vеry safe аnd sound.

Thе waу іn which gold hаs catapulted tо nеw highs rіght frоm thе word go аt thе stock еxchаngеѕ speaks volumes аbоut іtѕ demand and popularity. It hаѕ bееn аn outperform when уou talk about othеr stocks or bonds аѕ alternative investment solutions. It hаѕ provided investors wіth consistent growth of thеіr capital. Thе concept оf maximization оf wealth cоmеѕ true in case оf gold.

Yоu саn alѕo соnsіdеr the fact thаt bесаuse gold hаѕ nеvеr depressed аn investor bу continuing thе upside trend іt іѕ morе reliable. In case of оthеr alternative investments like stocks, mutual funds оr bonds thеre аlwаyѕ ѕоme or thе оther risk involved. Gold stock acts aѕ a shield іn times whеn thе economy оf a соuntrу іѕ passing thrоugh а bad phase. Devaluation оf thе currency, depressing trends аt the stock market аnd inflationary pressures do not affect thе stability оf gold stocks. On thе contrary, gold stocks ease оut thе heaviness іn thе climate created bу аll the аbоvе mentioned economic factors.

Gold іs а rare metal whісh is the rеаѕon whу it's аlwауѕ high оn demand and іs ѕо valuable. Hеrе аgаіn gold-stocks score a point. Thе reserves оf gold аrе continuously decreasing аnd helping іtѕ prices reach to а nеw level. Thіs situation іs going tо carry on іn coming future аlѕо. Hencе investment in golds stock іs goіng tо gеt morе profitable by еaсh passing day. Yоu cаn be rest assured аbоut а safe, profitable and growing investment іn golds-stocks аll уоur life.

You can gеt more information about Mineral Exploration Company bу visiting Gold Mining Exploration.

“I see gold hitting $2,500,” says David Tice

David Tice, founder of the PrudentBear Fund, caught up with Daniela Cambone of Kitco News at the 2011 New Orleans Investment Conference to discuss his projections for gold and why he’s bullish – despite being the classic bear.

Source: YouTube, October 31, 2011

Mining for Gold on Wall Street

11/02/11 Baltimore, Maryland – Many technical analysts are saying the gold and silver markets are “breaking down.” I say the precious metals markets are cracking up…with laughter at the monetary shenanigans going on in the US, Europe and elsewhere.

Sure, gold and silver have suffered a sharp correction over the last few weeks. But so what; corrections always occur during long-term bull markets. Gold and silver are still cheap, which means that long-term investors cannot afford to ignore the recent weakness in the precious metals markets.

The gold price, at $1,664 an ounce, is still well below the inflation-adjusted all-time high of $2,330. Likewise, the silver price, at $32 an ounce, could quadruple and still not reach its inflation-adjusted all-time high of $136.

These comparisons do not automatically mean gold and silver are a “buy,” but they do illustrate how much higher prices could climb over the near term simply to “catch up” with inflation.

Now add in the fact that the powers in charge of the dollar and the euro are losing control of the currencies they purport to control, and voilà, you’ve got all the ingredients necessary for a continuing bull market in gold and silver.

If, as I expect, gold and silver prices will resume their decade-long bull market very soon, gold and silver stocks may provide even larger returns than the metals themselves. A balanced long-term investment allocation, therefore, should include both bullion and stocks.

Admittedly, gold stocks have been a big disappointment during the latest phase of the gold bull market. For more than a year, gold stocks have been doing next to nothing, even though gold and silver have been trending higher.

“Gold-mining equities may be married to the gold price,” observes James Grant, editor of Grant’s Interest Rate Observer, “but the spouses are not infrequently estranged.”

Since the day the gold price first jumped above $1,000 an ounce on March 13, 2008, the yellow metal has soared 68%. But over the same time frame, gold stocks, as represented by the Philadelphia Gold and Silver Index, have fallen 3%.

No investor buys a gold stock to lose 3% while the gold price is soaring 68%.

Perhaps gold stocks are due for a change of fortune.

Gold stocks are very cheap, both in relation to the gold price and in relation to most fundamental valuation measures.

The chart below shows the price-to-EBITDA ratio of the XAU Index of gold stocks. This ratio is a measure of price-to-cash-flow and tends to illustrate valuation more accurately than the more familiar price-earnings (PE) ratio.

Today, the price-to-EBITDA of the XAU Index is currently around 6.7 times — the lowest valuation in a decade.

For example, based on enterprise value per ounce of gold reserves (proven, probable and inferred), a buyer of the gold stocks in the table below would pay anywhere from $81 an ounce (AngloGold) to $224 an ounce (Goldcorp) for the gold these companies have in the ground.

Expressed another way, the enterprise value of AngloGold is only 4.9% of the value of its gold in the ground. Most large silver companies are also selling for pennies on the dollar of their in-ground metal.

Obviously, this very rough metric does not take into account the cost of pulling that gold and silver out of the ground. Furthermore, gold and silver mining companies always sell for deep discounts to the value of their metal in the ground. But today’s discounts are much deeper than they have been in several years.

If you don’t own gold stocks yet, now is a great time to buy them. And if you already own them, you should certainly hang on, or add to your favorites.

Gold stocks are cheap.

Gold Prices and the Real World

The relationships – both real and imagines – between Gold Prices and events...

YOU MIGHT have thought, last Thursday,  that the 'resolution' to the Eurozone debt crisis would have caused gold to tumble, the Euro to soar, and the Dollar to fall – perhaps with the Dollar Gold Price steady. So why are Gold Prices behaving as they are? asks Julian Phillips of GoldForecaster.

There are so many imagined relationships between gold and other factors and as each one proves incorrect, another takes its place. Is this because the media needs to keep our attention? In part yes, but the credibility that's given to these stories comes from the markets' desire for hope, often unrealistic desperate hope. Gold and silver, in their role as counters to currencies, are harbingers of uncertainty, fear and (to the banking system) a threat to the credibility of paper currencies.

What was thought of as a successful solution to the Eurozone crisis, as the bright fog cleared, was seen as it is –a lifeboat to the Euro and not a repair of the ship. Markets are wise enough to see this, so global buying came in as the deal was announced complete without details. 

The bottom line is that the structural strains of having weak economies joined at the hip to strong economies under one currency cannot work until there is fiscal union and a centralization that overrides national governments, such as is the case in the US It is no coincidence that this is what would have happened had the strong nations of the Eurozone conquered the weak ones in war. Europe has been battling with that problem for well over 2,000 years, so don't expect dramatic success on that front.

A single currency for different economies simply allows capital to flow from the weak to the strong and place untenable strains on the weak. The facilitation of this through loans far in excess of their capacity to repay them made the formula palatable, until now. While there has been a write-off of 50% of Greek's loans, they're burdened with a repayment schedule that continues to leave them in a weakened position. The same can be said of the other debt-distressed nations of the Eurozone (Portugal, Ireland, Italy and Spain).

Until these major issues are rectified from the ground up, doubts about the credibility of the Euro will persist and investors will remain cautious. So as a measure of value it remains suspect. This is positive for the Euro, gold price…

The President of the Bundesbank, Herr Weber, recently gave his reason for holding gold in Germany's reserves. He said that "gold was a useful counter to the swings of the Dollar." What did this mean? The Dollar is the world's sole reserve currency –one on which the bulk of global trade is transacted. It's the bedrock of the world's currencies. If it fell, it would take other currencies with it. They are the branches sprouting out of that trunk. If the concept of confidence in the US Dollar were destroyed, no other currency would stand. The only money out there carrying any global credibility would be gold and silver. 

With a far better structure to cope with the strains currently being seen in Europe, one would assume that the Dollar will be free of such strains, particularly because the Fed can print money at will and spread it across the world. That was the case until a few years ago. Then the perpetual US Trade deficit stretched it credibility too far. The nations that took in these Dollars ploughed their surpluses back to the US and bought U.S Treasuries to the extent that they now own 50% of that market. 

In essence therefore the US has borrowed back the money they exported. This is why it's so easy to keep interest rates so low. Foreign Dollar holders are looking to preserve value and hardly care about the income they receive. This has stopped the Interest rate markets in the US from functioning as they were designed to –to act as a control over the US economy via interest rate levels.

Now add to that, the raging over indebtedness of the US government, a situation that would never be permitted by the markets for private investors. In the belief that the government would rectify this budget deficit, markets have remained benign to the behavior of policy-makers. But lo and behold, government cannot govern this matter, which is why we went through a protracted game of brinkmanship as partisan politics stymied the resolution of the problem. With the game apparently ending in the super-committee being tasked with cutbacks, the Dollar was treated with respect again. But once more, we find partisan politics intervening. The super-committee (a misnomer for sure) is moving to brinkmanship again over party politics, threatening the credibility of the US and its Dollar.

Bear in mind, the party leadership has passed authority to this committee to finalize matters. Once again the credibility of the Dollar is on the line. Unlike Europe, with its fragmented system, it's not individual States that are the problem but the nation's governmental system that threatens the Dollar. In the last week, it's the Euro that has risen and not the Dollar that has fallen, but it looks that way. To see the Dollar fall, see it fall against a group of currencies, not just one.

The fear is that if the Dollar falls, then all other currencies will fall with it. The net effect looks like a stable exchange rate market, because what's there to measure it against? Only precious metals come to mind. Their market is so small, value-wise, that it's ignored by global financial markets. A glance at history shows us that this treatment of gold, silver can only last for as long as it takes one or more nations to break ranks and turn to gold as the real money again. Central banks of the emerging nations have already made that move, quietly and with ever so small steps, by buying gold for their reserves as it becomes available to them.

Gold Stocks

Gold Stocks:

Gold stocks can be as viable investments as gold bullion is these days. The reason is that (old) mining stocks hold a leverage or value to the price of gold. It is without question that the price of gold is not so much high as is the value of the US dollar that has fallen. Since gold is traditionally priced in US dollars, as the dollar falls the price of gold rises. This is the exact reason why gold functions as such a powerful hedge against inflation. (Gold) Metal stocks are linked to the value of gold because of what investors consider to be the reserve of in-ground-gold that mines possess. In other words if the gold stock is purchased when gold is $200 per troy ounce and the spot price of gold rises to $1800 per troy ounce, then the value of the metal stocks also rise because the gold that is currently being mined is suddenly more valuable.

 

Gold Stocks -The Value of the Dollar:

To consider gold stocks or to ask is gold a good investment, consider the likely hood of the value of the US dollar. America 2011 is sitting on a pre-election year. Traditionally the American investments become slightly more unstable when there is a potential change in presidency. Americans are not fond of change in leadership or rather they are not fond of the uncertainty that surrounds change in leadership. Also, take into consideration the political unrest that is happening in the United States. Movements like “ Take Over Wall Street”, are signs of unrest among the American people. Why are these items important? They are important because they all point to a continually weaker dollar. The wearer dollar means a potential increase in the price of gold. This further translates into better investments for gold and metal stocks. This helps to answer the question – Is gold a good investment?

 

Gold Stocks Vs Gold Bullion:

Gold stocks offer a value that gold bullion does not. That value is the absence of costs associated with buying physical gold. There are no dealer markups, shipping cost, storage costs, or insurance costs that are associated with physical gold. This means that the investment in (gold) mining stocks is just a simple investment transaction. Is gold a good investment? In terms of cost and price, yes it is a good investment. Even considering the astronomical rise on the price of gold today, gold is still a good investment because the likelihood that the American dollar will continue to fall in value. Precious metal stocks should continue to offer a very good return on investment for investors.

 

Gold Stocks – The Price of Gold:

Gold stocks and the price of gold are tied together in a parasitical type relationship. While the price of precious metal stocks does little to affect the price of gold, the price of gold can affect the price of gold stocks. The relationship between stocks and the price of gold revolves around the mining of gold. Specifically, it revolves around the amount of gold that a mine has in the ground. This is called a reserve of gold. As the price of gold rise or falls, the value of the in ground gold becomes more or less respectfully. This is the crux of the risk that is associated with buying any stock. The question to ask is if gold is a good investment. If the answer is yes, then the market is expecting that the price of gold will continue to rise. This would make investing in metal stocks a potentially lucrative investment, as well. This again, goes back to the question about what will happen to the American Dollar? Will the dollar continue to fall in value? Will inflation continue to rise? Will the price of gold continue to rise? All of these questions go in to the determining whether or not gold is a good investment.

 

Gold Stocks – Tips About Price:

It may seem odd that many mining companies have listed different prices of the value of their gold. Why would that be if the price of gold is unilaterally consistent? The reason for the difference in pricing is relevant to all stocks. Issues that can affect mine production are paramount factors that affect the price of gold offered by mines. Political unrest, work or labor issues, natural disasters such as earthquakes, can all affect the value of mining stocks. Other factors that should be considered are the price of operations, production rate, etc. These factors, while affecting the price of gold produced, may actually be beneficial to investors of mining stock. If those factors are corrected, and production goes up while the cost of operations goes down then the value of the stocks will rise. Opportunity, to say the least may be at hand.

Is gold a good investment? The answer to that question will change on a daily basis. This is because the factors that go into determining the price of gold change on a daily basis. For mining stocks, the factors that affect the value of those stocks also change frequently. This makes it difficult to answer that question. Investors should consider the daily price of gold along with the potential for the value of the US dollar to fall or rise, as indicators for gold as an investment. Investment in mining stocks should also be considered carefully with additional research being focused on cost of operations and productivity of the mine in to determine if gold is a good investment. The outcome will indicate who likely the investment will pay off in the future.