Why You Should Invest in Gold Mining Companies as Opposed to Tangible Gold

Those interested in gold must decide whether it is better to invest in tangible gold or the companies that mine gold.  It is certainly tempting to buy bars of gold and other physical forms of gold yet doing so is not the most prudent investment.  Rather, investing in gold mining companies is the better option.  Here’s why.

Physical Gold is More Difficult to Sell and Secure

Invest in a gold mining stock or fund and you will be able to sell it whenever desired.  Alternatively, if you were to buy gold bars or other forms of tangible gold, selling it would prove more challenging.  In order to sell physical gold, you must find someone within a reasonable driving distance of your home or business who is interested in buying it.  Furthermore, this individual might not pay the market rate for your gold. 

Making matters worse is the fact that holding onto physical gold creates the potential for someone to steal it from your garage, basement, attic or other storage space.  Alternatively, stock in gold mining businesses or gold funds can be sold in a fluid manner.  Furthermore, there is no risk of someone breaking into your stock trading account and stealing your gold mining stock.  You and only you have the password to your trading account.

Buying Gold Bullion is not as Easy as Gold Mining Stocks

Buying gold bullion is not as easy as most envision.  It takes time and effort to research buying opportunities and pinpoint a trustworthy merchant.  Furthermore, the merchant you select might not be near your home, forcing you to pay for shipping.  Unless you have the funds necessary to buy a gold bar that is worth upwards of half a million dollars or more, buying tangible gold bullion will prove challenging. 

The sad truth is comparably small denominations of gold bullion are in short supply as a result of the hike in demand and economic shutdowns amidst the pandemic.  The bottom line is you will pay a premium to acquire physical gold bullion.  Instead, take the digital route by investing in gold mining stocks or funds.  Gold stocks and funds can be purchased in mere seconds from the comfort of your office chair.

Gold Mining Stocks Have More Potential for Profit Than Actual Gold

There is significantly more upside potential to gold mining stocks than physical gold.  Gold mining stocks and gold funds present the opportunity to own part of companies that generate hundreds of thousands of ounces of gold on a yearly basis.  Furthermore, millions of ounces of the precious metal have yet to be mined. 

If you invest in a gold mining company that makes a significant gold discovery, the stock will soar to new heights and your investment will balloon that much more.  Alternatively, the value of a gold bar or other piece of tangible gold is tied to the precious metal’s market rate.  This means there is less potential for upward movement compared to gold mining stocks.