Investing in gold does not need to involve the purchase of quantities of the actual metal. It can take the form of buying stock in physical gold or in gold mines. There are many cheap gold mining stocks that can provide an investor with a nice profit if they are sold at the right time.
The price of gold is increasing, so it is an ideal time to allot some money to investments in this precious metal. Individuals who purchase gold mining stocks are actually investing in the gold mine itself. This represents an investment on the supply side of the market, an alternative to the physical gold kept by investors, which may not be released to the market even when there is high demand.
In general, the performance of gold mining stocks tends to mirror that of the price of gold. There are more than 300 gold mining companies that are publicly traded within the U.S. These range from penny stocks to those worth over ten billion dollars. Investors currently see gold as a good investment because it can benefit from global weakness as well as inflationary pressure.
Newmont mining is one of the large cap stocks that has experienced improved revenue and margins over the past several years. It currently trades at a price to cash earnings multiple of 11x. There are also less expensive options when it comes to investing in gold mines. Capital Gold Corp. is an inexpensive junior mining stock that experienced record levels of production last quarter while at the same time maintaining stable profits.
Those who are interested in investing in gold but would rather take an indirect approach should consider cheap gold mining stocks. Not everyone wants to buy gold coins, but they may want some form of ownership in the precious metal industry. Investing in a gold mining stock is a way to have an ownership share without finding a place to store physical gold.