Gold Stocks

Gold stocks can be tricky for some investors. Many of the top gold stocks to buy are well positioned, geographically, to benefit from rich deposits of gold in some of the more popular locations of the world. In times of market turmoil, investors typically will turn to gold. This is because gold stocks have been seen as safe haven assets. The bullish case for buying gold stocks during a period of market uncertainty dates back to the earliest days of the stock market at a time when gold was used to back the US dollar.

Investors can also make a type of indirect investment in gold by purchasing shares of gold mining stocks and other gold-related companies that focus on gold production or even gold refining. Depending on the business model and structures of gold stocks to buy, these companies may not be as directly influenced by the price of gold as a direct investment in the precious metal itself.

On the other hand, many gold companies often have exposure to other markets, which could dilute their connection to the price of gold. When it comes to the best gold stocks to buy, it is essential to pay close attention to what part of the “food chain” the company is in.

Are they a gold refining stock, a gold mining stock, a gold production stock or are they merely a gold-selling stock to buy? How does their business model impact the market or better yet how is their gold business affected by the market itself? All of these are good questions to ask before making a choice to buy gold stocks.

After suffering from low gold prices for years, the steady increase in the value of gold is excellent news for the sector’s bottom line. The reason is that gold stocks make money on the difference between what it costs them to produce gold and what gold is trading at. The difference between the two price points is generally all profit for the major gold mining companies. So, the higher gold goes, the more money the miners will make and in turn, this could translate into higher prices for gold stocks.