A Brief Introduction to Gold & Silver Mining Stocks

Gold and silver mining stocks are extremely popular, and over the last decade, some of them have made investors millions. It’s important to understand what you’re getting into when you buy mining stocks, however, because some people mistakenly believe that they are buying ownership of physical metals.  Of course, most precious metals experts generally recommend that conservative investors buy gold coins as a means for gaining access to the physical markets.  It is also important to have an understanding of gold and silver mining stocks as this can be a good indicator of where physical gold prices will travel in the future.

What are gold and silver mining stocks?

Gold and silver mining stocks are shares of publicly-traded mining companies. These stocks usually represent an entire company, although it is possible to buy shares of specific mines. Gold and silver mining stocks do not represent real gold or silver, just as owning Coca-Cola stock doesn’t entitle you to grab a free Coke whenever you feel like it.

How do you buy and sell gold and silver mining stocks?

Gold and silver mining stocks trade the same way other stocks trade – you can find “miners” on the Dow, NASDAQ and S&P markets. You can use a stockbroker to trade mining stocks or you can opt to have a go at it on your own by using online stock trading platforms like Scottrade or E-TRADE.

What causes fluctuation of mining stock prices?

Gold and silver mining stocks’ prices fluctuate based very little on the actual spot value of gold. If anything, mining stocks can themselves have an effect on precious metal prices because successful mines could translate into a higher supply and low prices.

Chart Source:  Atlanta Gold & Coin

The opposite effect can also be true – if mines under-produce then a perceived gold shortage could cause prices to skyrocket. Gold and silver mining stocks also experience fluctuation based on how the company is run (as is the case with any publicly-traded company). Lastly, changing government protocols (such as new regulations, coups, takeovers, mine nationalization, etc.) can affect the price of gold and silver mining stocks.

Conclusion

We hope this tutorial has been helpful in growing your understanding of gold and silver mining stocks. You’ll need to do a lot more research before you’re fully prepared to make a mining stock investment, and we hope this article has provided you with a good foundation on which you can increase your knowledge, thus giving yourself a better chance of making a successful investment.