, IncGold stock prices might puzzle the casual observer. How could gold prices be $1,100 per ounce when the gold stock prices of mining companies are only pennies per share? There are several things to consider both with mining companies and their stock prices, but for some people, they represent a high risk, high reward opportunity.
Mining and exploration companies use stocks to raise funds for their operations. Prior to hitting and confirming a strike, stock prices can be pennies per share, as with Golden Phoenix Minerals Inc. and its five cents per share stocks or $2.25 per share like Nevsun Resources Ltd and Vista Gold New. Companies like these may issue millions of shares of stocks to generate funds to purchase new lands and finance new explorations.
Once these companies have located gold, the jump in price can be quite amazing. Finding gold can turn stocks into a huge success, like Eldorado Gold Corp at $13.00 per share or Agnico Eagle Mines with an impressive $53.00 per share. Such returns are what entice investors into buying gold stocks in the beginning.
The downside is that not many mines ever hit. Even though a stock may only be five cents, you will still lose $100,000 if you own 2,000,000 shares. Many investors try and ultimately fail because that lure of making $20 million if the mine hits and stocks go to $10 per share is just too tempting.
While the rewards can be great, most people are more comfortable with the advantages offered by purchasing gold. $100,000 invested in gold bullion in 2000 would be worth nearly $400,000 today. The security in owning physical gold is that it is never worthless. If a mining company fails, the stock is worthless paper; if gold prices fall, the gold still retains considerable value that will increase when the price rises again.
Gold stock prices hold great allure for some people; the possibility of a big strike makes them willing to gamble their investment money. For most people, investments represent security, and one of the best investments around is physical gold in the form of bullion and certified gold coins.
Stewart Lawson
Senior Staff Writer - GoldPrice.net
