Which Way to Buy Gold: The Metal or the Companies? – by Simon Constable (Wall Street Journal – February 9, 2020)


After years stuck in the doldrums, gold is back in fashion. A common question from individual investors is, should they put their money into the precious metal itself or gold-mining stocks?

“It boils down to what you are trying to achieve” says Rohit Savant, vice president of research at New York commodities consulting firm CPM Group. For those seeking a strategic, long-term investment, Mr. Savant and other experts advise buying bullion—that is, bars or coins of the metal or funds that focus on such.

For those seeking to make a tactical bet on the gold rally, shares of gold miners might be preferable in that they offer the potential for bigger gains over a shorter period. Either way, investors should brace for a wild ride.

For much of the past decade, gold and gold-company shares weren’t great investments. The price of the precious metal briefly peaked above $1,900 a troy ounce in September 2011. By late 2015, it had fallen to $1,060 an ounce, a low for the decade.

“If you look at the price of gold over that time, it was in purgatory,” says Art Hogan, chief market strategist at National Securities. Gold stocks fared even worse.

For the rest of this article: https://www.wsj.com/articles/which-way-to-buy-gold-the-metal-or-the-companies-11581304020

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