Should You Buy Gold Mining Stocks?

SHOULD YOU BUY GOLD MINING
STOCKS?
By www.ProfitableTradingTips.com

http://profitabletradingtips.com/profitable-trading-tips/should-you-buy-gold-mining-stocks
Gold went up for years and then it
went down again.

With investors expecting a continued
market rally at least in 2017 gold is
down again and perhaps oversold.

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But, what happens when Trump’s
promises don’t pan out and the US
economy does not sparkle in
response to his fiscal policy
measures.

For example, all of that corporate
cash offshore might come back to
the USA and then be used for
mergers and acquisitions instead of
job creation.

If the stock market starts to sag and
worse if Trump starts a disastrous
trade war gold will make a
comeback.

The fact of the matter is that when
gold is on the way up it is better to
own mining stocks than gold bullion.

Should you buy gold stocks
today? the street thinks so.

According to them gold
stocks instead of gold belong in
your portfolio.

the vaneck vectors gold miners etf
(gdx) , barrick gold (abx) , yamana
gold (auy) , goldcorp (gg) and
newmont mining (nem) may be
deep in bear market territory from
their 2016 highs

but they are also in bull market
territory since their lows and have
outperformed since the end of 2015.

this outperformance makes
investments in gold stocks important
components in investor portfolios in
2017.

The article comes with lots of graphs
and the suggestion to invest on
weakness whether you are looking to
buy bullion, futures or gold stocks.

What Are Your Other
Options?

Maybe you invested in gold or gold
mining stocks way back in the 1970’s
or more likely in the run up from
2000 to 2011.

And then you saw your portfolio slide
and swore never to invest in the
shiny stuff again.

One tried and true way to take
advantage of a possible bull market
in gold and gold mining stocks is with
options.

We wrote about trading gold after it
fell from its peak.

there are those who believe that the
world economy is going from bad to
worse and that paper currencies will
be worthless in the long run.

this thinking attracts gold buyers
when the economy tanks.

then, when stocks start performing
well, people start selling their gold
and buying apple.

Predicting when gold will go up or
down can be chancy.

This is why trading stock
options on gold mining stocks may
be the way to go.

in trading stock options a buyer limits
his risk to the premium paid.

let us say that your fundamental and
technical analysis of abc stock
indicates that it will soon rise in price.

you can buy a hundred share of abc
for $100 a share or $10,000.

or you may see that you can buy a
$102 option on abc for $1.

a $102 option means that you can
buy to stock for $102 a share at any
time up until the end of the contract.

obviously the stock is currently worth
$100 a share and you would not
want to execute the contract.

but, if your analysis is correct the
stock price will go up.

let us say that the stock goes up to
$110 a share.

if you purchased the stock you make
$1000 minus fees and commissions.

that is a ten percent return on
investment.

and if the stock price falls to $90 a
share you lose $1000, ten percent of
your trading capital.

but in trading stock options on abc
you pay $100 for a $102 call option
on 100 shares.

the stock goes up to $110. you
execute the contract and purchase
the stock for $102 a share and then
sell for $110 a share.

you make $8 a share or $800 which
is a $700 profit or 700% return on
invested capital.

and, if the stock price falls to $90 you
lose your initial $100 and no more.

Should you buy gold stocks or
options?

Unless you own an infallible crystal
ball the way to go is probably
options, calls in this case.

Should You Buy Gold Mining Stocks?

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