Another way to invest in gold is buying shares in gold mining companies. Since these company’s revenue is generated from selling gold, their fortunes will be closely linked to its price. Shares in a growing company offering healthy dividends would most likely offer better returns than an ETC. However, your returns are not solely dependent on the price of gold, there are many factors that could affect the share price. Gold’s price could be booming and yet a particular company you have invested in may have unrelated problems that are stifling growth or even losing you money. A gold miners profitability depends on many things such as production quantity, production efficiency and currency movements. This explains why the gold mining sector has underperformed the gold price so far this century. However, this same reason could also mean that well managed miners may still be able to provide growth to investors in times when gold’s price is flat or falling. Randgold Resources (RRS), Centamin (CEY) and Petropavlovsk (POG) are some of the largest gold mining companies listed in London who have outperformed the price of gold in recent years.
Remember, a good portfolio is a well-balanced one. So, if you are concerned about traditional asset prices crashing as hot shot fund manager Paul Woolford is touting, then investing some of your portfolio in gold should offer you some protection. Furthermore, since president Trump frequently reminds us of his big red button, we may all need a “safe heaven” when we’re living in through a nuclear winter.