Gold stocks are one of the tried and true investments of long-term investors. They offer a hedge to different types of market risk. While many gold stocks take years to mature, the speculative nature of the industry can lead to investing profits. Long-regarded as a “safe-haven,” gold and gold stocks are typically purchased during times of stock market uncertainty. They’re also a favorite during times of fiscal stimulus and inflation. Some of the top gold stocks, however, are the ones making a profit. But just because there’s a profit made, doesn’t mean the gold stock is a mining company.
In fact some of the highest-priced gold stocks today are considered streaming companies. These types of companies will purchase and refine the raw materials of gold miners among other things. Lower overhead costs and development costs are favored over the opportunity to stike a big gold vein. However, if a gold streaming company also owns a piece of the mining property, it could be a one-two punch for investors.
Why Gold Stocks?
Furthermore, gold stocks may also offer investors dividends. Some gold stocks offer these dividends in either cash or physical gold. On top of that, when gold prices are on the rise, gold stocks tend to follow suit. That even goes for companies who may not have released any updated news as well. Some of the top gold stocks to watch include major miners. However they may also see junior gold stocks benefiting greatly from mergers and acquisitions too. While these junior gold stocks can be higher risk, the companies typically have a lower overhead.
So exploration costs are low. Buyout opportunities come when a junior taps a vein with potential for gold to be mined and a larger company comes in to put forth resources to do so. Usually it results in the larger gold company buying all or a piece of the junior gold stock and/or its mining claim.
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In a battered U.S. economy, can investors bet on gold stocks?