In recent articles we were mentioning that when you’re investing in precious metal stocks, more precisely gold stocks, or when you just hear someone mentioning that a gold stock is being traded, that it’s not actually a gold stock, but rather a stock of a gold mine that’s releasing stocks in order to fund new dig research or to finance some other investment. If you were thinking that this was actual stocks of precious metals, then you were wrong, because gold isn’t a company, so that it can have stocks and sharenholders, but what we neglected to mention in our recent articles is that there’s another situation where stocks could represent gold on the stock markets, and those would be precious metal funds.
For those who are not familiar with precious metals funds, they are places which are usually run by professional precious metal investors. Depending on the fund size they could hold a lot of gold in its possession, and the way that people who are running the fund are gathering the necessary money to run the funnd and to gather gold is by selling stocks on the stock markets. That’s actually one of the ways of how you can get your hands on actual precious metals while not knowing much about them and how exactly precious metal investments are conducted.
In a sense this would be the closest that you get to investing in gold stocks, if it is that we are talking about a precious metal fund that’s dealing with gold. If next to gold the fund also deals with other precious metals like palladium and platinum you’ve then can then secure the value of your investment even more because the chances that a drop in prices happens for all of the precious metals at once are very slim. Prices dropping means that the overall value of the fund drops, since what gives it value is the amount of stored precious metals that it has. If you for example have fund that’s has 1 tonne of gold, and if the price of gold goes down, so will the value of the fund, for exactly the value that that ton of gold went down. When the value of the fund goes down, so does the stock and that’s how you can either make money or lose money from the precious metal fund stocks. Buy low sell high is the motto, as it is always, all that it takes is a bit of knowledge, experience and luck, and you’ll make money off of precious metal funds in no time.