By Tom Vilord

Due to the unprecedented fear surrounding the Coronavirus, and the significant drop we have seen in the market as a result of Covid-19, many investors have been asking us about investing in precious metals, specifically Gold

The diversified portfolio has a small position in the gold market. The reason investors have been interested in gold is that the old reasoning is that if the stock market goes down like it is now due to the spread and the fear of the Coronavirus, the gold market may generally go up. This reasoning has become a possibility, but not a guarantee.

For some, investing in gold means holding gold coins. Some speculators buy gold contact futures on the commodity exchange. Future contracts are risky because you are betting that the price of gold will go higher in the future.  The contract requires a relatively small up front payment, but there can be daily fluctuations that require you have funds to back the dips in the price of daily gold.  

There are certain international gold stocks that are noteworthy. A Canadian based international player in the gold market is Agnico-Eagle Mines. It trades on the New York Stock Exchange and the Toronto Stock Exchange under the stock ticker AEM. The stock is also sold on the Frankfurt Stock Exchange.  This company has more than a thirty year history in the production of gold. Since the 1970s AEM has produced over four million ounces of gold. The company is international and has operations in Canada, United States, Mexico, Sweden and Finland.

Other noteworthy gold stocks include; Barrick Gold Corp, Goldcorp Inc., Kinross Gold Corp., and Newmont Mining.  Before investing. make sure these stocks fit your investment risk profile.  

In addition to owning individual gold stocks, you could also elect to purchase shares of a gold Index Fund or ETF such as iShares Gold Trust (IAU) or SPDR Gold Trust (GLD).  Investing in gold stocks and precious metal index funds or Exchange Traded Funds (ETF’s) can be purchased through a financial advisor, or via an online broker such as TD Ameritrade or Schwab. 

Investors who trade in gold should seek the advice of an analyst that can factor in all the various aspects that affect the price of gold.  If you own gold as a hedge against a weak dollar you should look for any strengthening in the dollar. The important thing to remember is to gage your investment in gold to a level that you are comfortable. 

The range of risk and amount you decide to invest in gold is a personal choice. It is always advisable to seek the expert advice of a stock expert or commodity expert before leaping into this market.

While diversification is very important, what is also very important is common sense investing.  Do not allow your fear and emotions dictate your investing decisions. The stock market has experienced many turmoils over the course of several decades.  Turmoil that has been caused by wars, politics, disease, etc. The market has always bounced back. Staying rational at times like this is easier said than done, but if you do your research and invest in solid businesses that are financially strong and have weathered previous storms, then this fearful time that we are living in right now can create many opportunities for us if we invest using sound judgement and not our emotions

I am not personally investing in Gold nor do I have any plans on doing so.  I have a watchlist of companies that I love and I am watching them very closely.  They are all down a lot but I think that fear will drive them down even further. I know these companies will be leaders in their respective industries for a long time and I have a very good idea for what these businesses are worth. Armed with that information, I am ready to get into these companies with absolute confidence once the time is right.

Let me know what your thoughts are on Gold.

Please be safe everyone!

Tom

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