How do I buy a gold mine

Gold mining or gold mining stocks

Anyone who, as an investor, has basically decided to invest in gold, first has to decide in which form this investment should be carried out. In addition to buying fund shares or gold coins, there is also the alternative of investing in so-called gold mining stocks. One also speaks of an indirect investment in gold, since other factors besides the gold price have an effect on the return. The gold mining stocks fall into the range of the commodity stocks, like for example the oil stocks or the gas stocks. One speaks of the gold mine stocks or in short also of the gold stocks, because it is mostly a gold mine that exists in the form of a stock corporation and consequently also issues shares that investors can purchase on the stock exchange or, in some cases, over the counter.

How do gold and gold mines play together?

It is well known that the main task of the gold mines is to mine gold at a certain point. The "value" of a gold mine depends to a large extent on the gold deposits and how complex it is to mine the gold. In principle, the gold mines are “completely normal” companies, so that sales and earnings do not only depend on how much gold is sold at what price. But of course the principle is that rising gold prices are to be assessed positively. Because, due to the demand situation, it is unlikely that the gold mines will experience sales difficulties when gold prices rise, so that the sales volume should not be reduced by rising gold prices. And in this respect, for most gold mines, rising gold prices mean higher sales figures and rising earnings at the same time.

The pros and cons of gold mining stocks

Normally, as described above, the profits of the gold mines increase when gold prices rise and decrease when gold prices fall. However, the development of the gold price usually does not have that direct effect on the share price of gold mining stocks. For the investor, this can be positive or negative, depending on the type of development, but that's exactly why one speaks of an indirect and not a direct investment in gold when buying gold mining shares. If you take, for example, the last few months, in which the stock exchanges around the world have recorded considerable losses in some cases, the gold mining stocks could not exclude themselves from this negative trend - despite rising gold prices! In this respect, the gold mining stocks are often “tied” to the general trend on the stock exchanges, so that fundamental data such as a very high gold price, which should actually lead to rising gold stock prices, are simply “ignored” by the stock exchanges. Therefore, investors should also take a very careful look at which gold mines they are investing in, because it is by no means the case that the gold mining stocks of all gold mines perform equally.

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