Mining Stocks Vs. Physical Gold and Silver

Real gold and silver that you could touch and hold in your hands or gold and silver mining stocks? Which one is a better investment? Well that all really depends on your investment objective.

If you’re looking for financial stability, a reliable nest egg for a rainy day, a hedge against economic instability, or want to preserve your wealth and purchasing power, well then you can’t find a better option than hard assets like physical gold and silver.

financial stabilityBuying gold and silver coins, bars rounds, ingots, and other bullion is basically like buying the most stable currency the world has ever seen. In fact that’s what gold and silver are, they’re super currency that civilization has relied on for thousands of years and is the best way to save money and preserve it’s value.

This is like putting money in the bank, but the difference is this is a bank that you control that is not subject to the manipulation of the corrupt banking system and your “real” money  will maintain its value year after year.

I do believe during certain world economic conditions, like the one we’re in right now, people saving in gold and silver will actually increase their wealth but these are considered hedge investments that typically will not make you a ton of money.

But making money is just one side of investing, preserving your money is equally as important so that’s why it’s always a good practice to have between 10 and 15% of your investments in physical gold and silver.

But if you want to make money, and right now may be the best time ever to do so, investing in gold and silver mining companies is the fastest way to get there.

making money with gold

When gold and silver are moving up in price,  mining stocks, as long as the companies are well-managed and actually profitable, go up three, five, sometimes ten times as much.  So if you have your money behind the right mining companies, it’s highly leveraged and going to create wealth at a much faster rate.

Take a look at the chart below comparing this year’s (as of August 2016) major gold/silver mining stocks to the physical assets and funds that track them…as you can see, the mining stocks have performed quite well and some much better than others.

Mining Stocks vs Physical gold and silver

Physical Gold and Silver vs. Mining Stocks (2016 YTD)

Another advantage of holding your money in stocks, is that in some cases you actually get paid while you’re holding them in the form of dividends.  In fact I only try to invest in mining companies that actually pay dividends.

Now here’s the rub, mining stocks are notoriously volatile and you can easily lose a lot of money if you invest in the wrong companies. All stocks carry a risk, but mining stocks are known to be one of the riskiest sectors so practicing good diversification strategies is very important.

To manage volatility and mitigate risk, a smart idea is to invest in the entire sector via funds and ETFs.

My favorite ETFs to do this are Market Vectors Gold Miners ETF and Junior Gold Miners ETF.   The downside to ETFs is that you don’t collect the company dividends while holding them, but you eliminate the chance of one single, troubled mining company taking a huge junk out of your investment portfolio.

Plus, they have performed quite well YTD.  Look at the graph below and you can see why I prefer buying well managed mining ETFs to safely capitalize on the rise of gold and silver… in fact I just bought a few more shares right now.

gold mining etf vs gold and silver

Market Vectors Gold Miners ETF (GDX) and Junior Gold Miners ETF (GDXJ) vs. Physical Gold & Silver Performance

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PS: To get my list of the best online dealers to buy gold and silver bullion fast, cheap, and without getting scammed… CLICK HERE


Meet the Author

Dallas Piscopo

I am the founder of Aztec Gold and Silver and a self-taught precious metals investor helping people to become modern-day fiat currency alchemist transforming paper money into true wealth and financial stability through gold and silver investments.

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