Article on GOLD MINING STOCKS---PLEASE READ TO THE END!
How To Invest in Gold Mining Stocks
By Greg McCoach
Thursday, January 8th, 2009
When comparing the performance of various investments over the past ten years, it is evident why we should remain focused on investing in gold mining stocks.
The Best Gold Mining Stocks Index
A good measure of gold mining stocks is the Amex Gold BUGS (Basket of Unhedged Gold Stocks) Index [AMEX: HUI].
The HUI Gold Bugs Index is a modified, equal-dollar weighted index of gold mining stocks. The index was designed to provide significant exposure to movements in gold mining stocks by including companies that do not hedge their gold production beyond 1.5 years. The AMEX Gold BUGS Index currently consists of 15 of the largest and most widely-held public gold mining stocks.
AMEX Gold BUGS Index
Source: NYSE Euronext
Over the past ten years, this basket of gold mining stocks has outperformed every major equity index and commodity in the world.
Gold Mining Stocks Outperform Most Assets over Ten Years
The HUI Gold Bugs Index has returned a solid 347% for the decade, while the Dow Jones, S&P 500, and the NASDAQ all show a significant loss.
Even when compared to physical commodities, which have done very well during this bull market, gold mining stocks outperform. Gold and oil have experienced a respective 206% and 270% price increase in the last ten years, while the HUI Index is up nearly 350%.
Source: Union Securities Ltd.
So despite all that we have had to endure in terms of volatility during the tenure of the current financial crisis, the clear winners over the past decade have been gold mining stocks. This clearly validates the investment strategy of both Gold World and my Mining Speculator newsletter.
And with all that is happening in the financial world, the amount of new investors in into gold and gold mining stocks will dwarf what we have seen thus far. In other words, get ready for the biggest moves in gold mining stocks over the next two years, particularly in 2010 which I am starting to refer to as "The Year of Gold Mania."
However, and this is very important, we always need to remember to keep our passions in check.
