Friday, July 17, 2009

Gold Stocks

There are many gold stock and gold share investment newsletters issued by various financial and gold analysts which one can study and follow.

Some of them are free and some are by paid subscription only. They come out on a regular basis usually monthly or weekly and in many cases, you can download a sample newsletter to see what it is like and if it is one you want to read on a regular basis.

Gold Stocks
Gold stocks are basically those shares or quantities of ownership in a company that administers gold, gold mining or gold in storage that one can buy and hold with a purpose of gaining a financial advantage, usually through the increased value of those stocks or shares or through dividends or a profit share issued to all holders of that stock or share.

Gold stocks can be much more volatile than gold prices as no two gold companies are the same. This adds many variables, such as companies management policy, mining diversification and other factors making it difficult to analyze the overall trend.

To quote Alan Snyder of Snyder Capital Management in San Francisco "Gold has all kinds of varying grades, meaning grams of gold per ton of rock." This means that the amount of gold obtainable from a ton of ore can vary depending on the quality of the grade of ore. Some ores might return ten grams of gold per ton while others may only return one gram. This affects the cost of production per ounce of course and so can have a big bearing on the overall cost of gold production for that company and is something that should be known about that mining company.

Let’s say for example it cost a company, $500 dollars per ounce to get an ounce of gold out of the ground. Provided the gold price remains well over the $500 mark per ounce then the company will make money. If the gold price, however, were to fall below $500 an ounce, for example less gold is obtainable per ton of ore processed, then the company will stop mining gold as its unprofitable. This is the operating leverage and this will vary with each company depending on their ore deposits and costs of operation in the country they are mining.

In addition, many gold mining companies, to offset potential losses, mine more than one mineral on the basis that they can gain on the swings that which they lose on the roundabout.

Companies must also list any reserves they have as deposits that are profitable to mine at current gold prices. So when the price of gold goes up, "a lot of ore that was too costly to mine at yesterday's price and therefore was not counted in reserves is now profitable and is counted in reserves," Snyder has pointed out.

Investors will value gold stocks and gold shares based on their price relative to reserves. When reserves go down, stock prices and shares will follow and when they go up so will the stock prices.

An additional complication when investing in gold stocks is that a company may ‘hedge’ or sell forward. This means it sells its production before it has happened. An example of this is selling a product before you have made it. This fixes the price of the product. A good example of this is just a couple of years ago at a time when gold prices were moving up, shares in Barrick Gold -- a large, stable company -- actually dropped because it had hedged a lot of its production. "The perception was, if gold goes up, Barrick won't benefit," says Lynn Russell, a gold-fund analyst at Morningstar. So it is important, when looking at investing in particular gold mining companies, to understand the management strategy as far as deposits and forward selling is concerned as this can greatly affect the value of the stock in that company.

Gold Stock Newsletters
So how you pick which is the best gold stock and investment letter to follow is a good question.

Most include information on:
Gold Stocks
Gold Shares
Gold stock investing
Gold stock prices
When gold stocks are going down
When gold stocks are going up
They can also include information on:
Australian gold stocks
American gold stocks
Canadian gold Stocks
Chinese gold stocks
African and South African gold stocks
Gold etf (exchange traded funds) shares
Junior gold stocks
Gold penny stocks
Gold stock warrants
Among other gold related issues and investment potentials.

All of the gold stock analysts are into predicting or trying to predict the future of gold stocks, gold shares and gold mining companies. Are gold stocks going up? Are gold stocks going down? What the best gold stock to invest in and similar issues.

These newsletters are covering, then, what the gold price going to do in months and years ahead and what sort of gold stocks or gold shares one should invest in. Also the gold stocks history and past performance as well as analysis by charts with the usual tools of technical analysis and fundamental approaches.

All of them, of course, display somewhere a disclaimer that they are not giving specific advice on investment or any financial advice. This is mainly to protect themselves from being sued by their readers or subscribers in the event that that subscriber or reader suffers a reversal of fortune or, in plain English, looses a lot of money as a result of following the advice or suggestions contained in the newsletter.

The write ups in this section of are basic information on the major gold stock and investment newsletters including who they are, a short bio or history, what they advise on and if the newsletter is free or needs to be subscribed to and if so how much it costs.

One should keep in mind that the discussions and look forwards in these newsletters are simply an opinion, informed of course, of the authors of the newsletter.

With that in mind many of them contain a lot of useful information, particularly about gold companies, what their management strategy is, their price history, any forward selling and much more. All very useful and can help one to make a decision about what to invest and where.

But the final decision will always rest with the investor, after all it is his or her money!

Gold Stock Newsletter Reviews

Here are some links to write up reviews to the more common and popular gold stock newsletters.
Aden Forecast
Big Gold
Dines Letter
Exploration Insights
Freemarket Gold Money Report
Fleckstein Newsletter
Global Watch Gold Forecaster
Gold World
Gold Newsletter
Gold Stock Bull Newsletter
Global Speculator
Ormetal Gold Stocks Newsletter
Harry Schultz Letter
Stealth Investor Newsletter
Taylors Gold Energy Tech Stocks
VR Gold Newsletter
Wall Street Window Newsletter
Zeal LLC Gold Stock Newsletter
Gold Investment
It should be born in mind that no one can predict the future when it comes to gold stocks and investments and all one can do is indicate potential or possible trends based on various factors that can affect the investment. In all cases one should consult with one’s own financial advisors before embarking on any investment as, not only is it important what one invests in and with how much, but also different types of investments have different tax implications and only you and your financial consultant understands your own tax position and what is the best investment for you.

One of the best investment vehicles for gold has always been the metal itself. There are no companies to take into consideration, no extra variables such as management strategies, other activities by companies that can affect their value and stock price.

But with the flow of information available from gold stock and investment newsletters, investors in gold can move further towards making an informed decision about how they would like to invest in gold.

No comments:

Post a Comment