Gold Miners Commodity

Gold mining ETFs and mutual funds invest the majority of their assets... Gold mining ETFs and mutual funds invest the majority of their assets in the shares of companies that mine and explore for gold. They also invest in gold royalty companies, which own streams of income related to existing or planned gold mines. These funds can be actively or passively managed, and may invest across different jurisdictions, depending on their mandate. Companies that mine or explore for gold come in three different sizes: Junior, mid-tier, and senior (otherwise known as large-cap). Junior gold mining companies are the riskiest of the bunch, as they often do not have a mine yet. These companies are usually still looking for gold, and so their stock price will fluctuate based on the drill results they produce. Some junior companies will have started production, though, and their share price will be affected by their ability to generate new economic reserves for their mine. These are companies that mine less than 300,000 ounces of gold annually. Mid-tier gold mining companies typically produce between 300,000 and 1 million ounces per year, and seniors churn out over 1 million annually. Investors are attracted to gold mining stocks due to their leverage to the gold price. If gold goes up by say 10%, the operating margins of a gold mining company can increase by significantly more. This makes an investment in gold equities more attractive for someone bullish on gold than the metal itself. Gold mining ETFs and mutual funds are not without significant risks and are only appropriate for those with a large risk appetite. The biggest risk is the gold price itself, as the price of gold and gold equities tend to be quite correlated. Other risks include those of a geopolitical nature (the possibility that a government might nationalize a mine), as well as higher energy costs, as those form a large part of a mine’s operating budget. Last Updated: 12/23/2024 View more View less

Gold mining ETFs and mutual funds invest the majority of their assets in the shares of companies that mine and explore for gold. They also invest in gold royalty companies, which own streams... Gold mining ETFs and mutual funds invest the majority of their assets in the shares of companies that mine and explore for gold. They also invest in gold royalty companies, which own streams of income related to existing or planned gold mines. These funds can be actively or passively managed, and may invest across different jurisdictions, depending on their mandate. Companies that mine or explore for gold come in three different sizes: Junior, mid-tier, and senior (otherwise known as large-cap). Junior gold mining companies are the riskiest of the bunch, as they often do not have a mine yet. These companies are usually still looking for gold, and so their stock price will fluctuate based on the drill results they produce. Some junior companies will have started production, though, and their share price will be affected by their ability to generate new economic reserves for their mine. These are companies that mine less than 300,000 ounces of gold annually. Mid-tier gold mining companies typically produce between 300,000 and 1 million ounces per year, and seniors churn out over 1 million annually. Investors are attracted to gold mining stocks due to their leverage to the gold price. If gold goes up by say 10%, the operating margins of a gold mining company can increase by significantly more. This makes an investment in gold equities more attractive for someone bullish on gold than the metal itself. Gold mining ETFs and mutual funds are not without significant risks and are only appropriate for those with a large risk appetite. The biggest risk is the gold price itself, as the price of gold and gold equities tend to be quite correlated. Other risks include those of a geopolitical nature (the possibility that a government might nationalize a mine), as well as higher energy costs, as those form a large part of a mine’s operating budget. Last Updated: 12/23/2024 View more View less