GOLD VS GOLD STOCKS
Many investors have tried to take advantage of the precious metals bull market by utilizing mining stocks, because they may yield higher percentage increases when gold and silver prices rise. However, investing in precious metals stocks involves risks well beyond owning the physical asset. The documented risks are many and may vary. Unforeseen problems can send stocks crashing, which has happened to many stocks. Most mishaps are caused by the company`s management. Mining stocks and other precious metals companies can over estimate the size and the grade of ore deposits. A companies business expenses and costs of extracting the ore may be higher than expected resulting in lower profits or losses. For example, Sunshine mining and refining is one of the many companies that have seen disastrous results. Trading at $13/per share in1988 on the NYSE then trading at less than .05 cents/per share on NASDAQ in 2000.
More examples are Ashanti gold fields (Ghana) and Cambior (Canada). In 1996 Ashanti traded at $25/per share in 2000 Ashanti traded below a $1.50/per share. In 1996 Cambior traded at $16/per share in the last quarter of 2000 Cambior traded at below .25 cents/per share.
Remember when choosing a vehicle investment to participate in this monumental precious metals bull market, investments such as ETF`S and precious metals stocks have financially devastated investors.