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Investing in gold stocks

They’re celebrated as a safe haven, but geopolitical shifts may affect mining profits.

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Shannon Terrell
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Gold has long been hailed as a safe fallback for investors — especially those looking to diversify and hedge against inflation. But the companies responsible for this flashy commodity aren’t immune to risk and must be mindful of economic and geopolitical fluctuations in the countries they operate in.

What are gold stocks?

Gold stocks are stocks from companies involved in the mining and production of gold. The category is heavily dominated by mining companies, but investors can also back gold streaming and royalty companies: companies that fund mining efforts in exchange for the opportunity to buy gold at a set price in the future.

Gold stocks are one way for investors to gain access to this historically significant commodity, but there are also other ways to invest, including gold exchange-traded funds (ETFs) and purchasing physical bullion and coins.

Why invest in gold stocks?

Gold stocks can help diversify and stabilize your portfolio while simultaneously representing the cultural and historical significance of gold. Simply put: gold is valuable. It was valuable thousands of years ago, and it’s valuable now. It predates modern currency and its price tends to move independently of the stock market, strengthening its diversifying properties.

Historically, the price of gold has risen in tandem with the cost of living. This makes it a powerful hedge against inflation. It also tends to perform well in a down market as people fall back on the security of gold and cash in times of economic uncertainty. For an example of this phenomenon in action, look no further than the 1930s — when the market crashed, the purchasing power of gold skyrocketed.

With its ability to weather highs and lows and its inverse relationship to stocks, gold makes for a solid portfolio stabilizer.

Gold stocks

Since gold mining is an international enterprise, be prepared to invest in companies headquartered outside the US: Select a company to learn more about what they do and how their stock performs, including market capitalization, the price-to-earnings (P/E) ratio, price/earnings-to-growth (PEG) ratio and dividend yield. While this list includes a selection of the most well-known and popular stocks, it doesn't include every stock available.

What ETFs track the gold category?

Stocks aren’t the only option for investors interested in gold — there are numerous ETFs that track the gold category. These ETFs follow numerous sub-categories of the industry, including mining companies, exploration companies and the asset itself:

  • Global X Gold Explorers ETF (GOEX)
  • iShares Gold Trust (IAU)
  • iShares MSCI Global Gold Miners ETF (RING)
  • SPDR Gold Trust (GLD)
  • Sprott Gold Miners ETF (SGDM)
  • Sprott Junior Gold Miners ETF (SGDJ)
  • VanEck Vectors Gold Miners ETF (GDX)
  • VanEck Vectors Junior Gold Miners ETF (GDXJ)

    Outside of stocks and ETFs, there’s also the option of purchasing physical gold, including coins, ingots and bars. If you plan to buy physical gold, make sure you have a secure place to store it before you invest.

    Risks of investing in gold

    Most gold stocks are vulnerable to the same risks as other mining stocks, namely: economic shifts, geopolitical changes and natural disasters.

    Where a mine is located factors heavily into its potential profitability, with many mining companies managing international operations. The political climate of the country in which a gold mine is located can affect material prices and businesses processes.

    Gold mining companies also need to contend with Mother Nature. Natural disasters, while uncommon, may sideline mine operations for months, depending on the extent of the damage.

    Compare trading platforms

    To buy gold stocks, you’ll need a brokerage account. Narrow down your options by comparing features and fees.

    1 - 7 of 7
    Name Product Asset types Stock trade fee Minimum deposit Signup bonus
    SoFi Invest
    SoFi Invest
    Stocks, ETFs, Cryptocurrency
    $0
    $0
    $10 - $100
    when you open an account and place a first crypto trade of $50 - $5,000+
    A free way to invest in most equities.
    Go to site
    More Info
    eToro
    eToro
    Stocks, ETFs, Cryptocurrency
    $0
    $10
    8%-12% of your deposit
    when you sign up and deposit at least $50. T&Cs apply.
    Trade stocks in the app or online with $0 commissions. Not available in NY, NV, MN, TN, and HI.
    Go to site
    More Info
    Public
    Public
    Stocks, ETFs, Cryptocurrency
    $0
    $0
    Receive a free stock slice worth between $3–$300
    when you sign up for an account and deposit at least $20.
    Commission-free trading in stocks and ETFs with a social networking twist.
    Go to site
    More Info
    Tastyworks
    Tastyworks
    Stocks, Options, ETFs, Cryptocurrency
    $0
    $0
    $200 in US stocks
    when you open and fund an account with min. $2,000 for 3+ mos.
    Trade stocks, options, ETFs and futures on mobile or desktop with this advanced platform.
    Go to site
    More Info
    JPMorgan Self-Directed Investing
    JPMorgan Self-Directed Investing
    Stocks, Bonds, Options, Mutual funds, ETFs
    $0
    $0
    $125 - $625
    when you open and fund an account with $25,000 - $250,000+
    INVESTMENT AND INSURANCE PRODUCTS ARE: NOT A DEPOSIT • NOT FDIC INSURED • NO BANK GUARANTEE • MAY LOSE VALUE
    Go to site
    More Info
    Robinhood
    Robinhood
    Stocks, Options, ETFs, Cryptocurrency
    $0
    $0
    Get a free stock
    when you successfully sign up and link your bank account.
    Make unlimited commission-free trades, plus earn 3% interest on uninvested cash in your account with Robinhood Gold.
    Go to site
    More Info
    Tradier
    Tradier
    Stocks, Options, ETFs
    $0
    $0
    N/A
    Customize your trade platform or build your own Deep tools, charts and screens Analyzers to help you study before you trade
    Go to site
    More Info
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    *Signup bonus information updated weekly.

    Disclaimer: The value of any investment can go up or down depending on news, trends and market conditions. We are not investment advisers, so do your own due diligence to understand the risks before you invest.

    Bottom line

    No investment is free from risk, and gold stocks are no exception. Before you buy in, weigh the potential benefits against the risks to determine whether gold stocks are a practical addition to your portfolio.

    Compare brokerage account features and fees to find the trading platform best suited to your investment goals and budget.

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