Buying Gold Stocks

Gold stocks are usually gold producers. That mean they mined gold and sell the minded good. You can buy gold stock through a stock broker. Or you can buy a group of stock by buying a gold mutual fund or (ETFs). Gold stocks usually move to gold prices, but they don't move the same amount and they don't move the save way.

Buying Gold

Gold on the other hand is the metal itself. It used to be that in order to buy gold you have to physically take possession of the metal. However, this is no longer the case. Currently, there are two or three ETF or exchange traded funds that "holds" gold. The first two funds are IAU and GLD, which actually own gold and you are buying a share of that ownership. There is also DGL which owns contracts on gold. You can purchase these shares through a broker and they will give you very direct exposure to gold movement--a more "pure" play on gold. Buying gold stocks is not as pure.

Investing in one is not necessarily better than another, they are the different. One represents shares in business relating to gold and the other is the gold itself.

Buying Gold vs. Buying Stocks

The performance of gold bullion is often compared to stocks. They are fundamentally different asset classes. Gold is regarded by some as a store of value (without growth) whereas stocks are regarded as a return on value (i.e. growth due to anticipated real price increase plus dividends). Stocks and bonds perform best in a stable political climate with strong property rights and little turmoil.

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