Gold: Secure Haven or a False Idol?

August 30, 2012


Gold: Safe Haven or a False Idol?

Post by Tracey Ryniec

As the fiscal crisis continues, traders are browsing for security anyplace they can get it. Genuine estate is naturally out. Equities are finding hit. The currency markets are roiling.

During history, gold has acted as a secure haven in instances of economic pressure.

Ought to you be investing in it?

Investors about the globe are flocking to the yellow metal. The South African Rand Refinery which manufactures the well-liked Krugerrand coin, is now operating its plant seven days a week to preserve up with demand for its gold coins. Similarly, the Austrian mint has added weekend manufacturing.

In Perth, Australia, the Perth Mint has hired more employees and has doubled its coin production. About 80% of its business is accomplished outdoors of Australia in North America, Europe and Asia.

The U.S. Mint lately announced it was temporarily suspending all revenue of the 24-karat American Buffalo gold coins due to growing demand as the Mint’s inventories have been depleted.

A couple of weeks ago, it also suspended income of the American Eagle coins, also due to sturdy need. American Eagle revenue resumed, but only to a choose group of designated dealers. The Mint will also resume product sales of the Buffalo coins shortly.

But buying coins is different from getting shares in gold mining organizations. The value of gold does not often correlate with earnings of mining firms. Stocks of gold mining producers sometimes decline even when gold charges are soaring.

Must You Buy Gold Mining Stocks Now?

The cost of gold has been volatile, with huge swings in the last two weeks. Gold stocks have also observed big moves up and down. Neither is for the faint of heart.

There are two classes of gold mining stocks: the junior miners and the huge miners. The big miners have a longer background of earnings and are normally believed to be significantly less volatile. The junior miners are riskier but that threat can spend off big if gold rates soar.

I did a display on Analysis Wizard to uncover gold mining stocks that were at least a Zacks Rank #three and had earnings growth.

Barrick Gold (ABX) is 1 of the world’s greatest gold producers with 27 mines on 5 continents. ABX, headquartered in Toronto, is a Zacks #three Rank stock. It has shocked on estimates 2 out of 4 quarters by an typical of one.45%. Analysts count on earnings growth of ten%.

Newmont Mining (NEM) is also one particular of the world’s biggest gold producers with mines on 5 continents. Newmont was founded in 1921 and is headquartered in Denver. The organization is a Zacks #3 Rank stock. Analysts assume earnings development of 14.three%.

Drdgold Restricted (DROOY) is a South African medium-sized gold producer with mines in South Africa. Drdgold is a Zacks #one Rank (Strong Purchase) stock. Analysts expect earnings development of 42.15%.

Gold Stocks Not the Only Bet

Individual gold stocks may possibly be as well risky for your investing fashion. You can invest right into gold itself by means of an exchange traded fund, SPDR Gold Shares (GLD), which was launched in 2004. This ETF tracks gold costs as determined by the London PM fix and actually holds gold as a custodian.

Investors flocked to GLD in September, pouring in an added $ four billion, on top of the $ 17.four billion in assets the ETF had at the finish of August.

Do not Get Blinded by Gold’s Shine

A gold-focused investment might be a way to diversify a portfolio, but that is all it should be: diversification. Don’t area all your bets on one particular sector or asset class. It was that singular emphasis, on real estate and ahead of that on technologies stocks, that has tripped up investors in the previous.

Gold has shone brightly during dark instances just before but as swiftly as it soared, it also lost its luster.

Seem at gold, and gold stocks, for what they are, a safer haven in a time of uncertainty. Invest accordingly.

About the Writer

Tracey Ryniec is an Editor at Zacks Investment Investigation for far more info please check out

Use and distribution of this write-up is topic to our Publisher Guidelines
whereby the authentic author’s details and copyright must be included.


Tracey Ryniec is an Editor at Zacks Investment Study for a lot more details please pay a visit to

Use and distribution of this write-up is subject to our Publisher Recommendations&#13
whereby the unique author’s information and copyright should be included.&#13

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