Investors Shun Gold Mining Stocks in Favor of ETFs

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Traditionally, investors have bought gold mining shares for the extra leverage to benefit not only from a rising gold price but also higher profit margins. The equation has flipped in recent years despite a surge in the gold price to new highs this year.

Major gold firms grappling with declining output and surging costs are being cold-shouldered by investors opting for exposure to bullion through exchange traded funds (ETFs) or high-growth junior firms.

A wave of money flowing into gold ETFs, which issue shares backed by physical stocks of bullion, touched a record last week as investors sought a safe haven from other markets.

Traditionally, investors have bought gold mining shares for the extra leverage to benefit not only from a rising gold price but also higher profit margins.

The equation has flipped in recent years despite a surge in the gold price to new highs this year.

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