The Gold is regarded by some as a store of value (without growth) whereas stocks are regarded as a return on value (i.e., growth from anticipated real price increase plus dividends). Stocks and bonds perform best in a stable political climate with strong property rights and little turmoil. Gold Mining stocks are a logical substitute for investing directly in gold futures in the commodity market, which is not as common and easy as buying stocks for individual investors through their stock brokers.
Even though the gold ETF is designed to participate in the physical gold market on behalf of investors, gold stocks and their companies hold an important piece of the puzzle being on the supply side, as another part of the gold supply, gold hoarded by investors, may or may not be released to the market regardless of demand. Absent of poor management and bad operations by gold mining companies, gold mining stocks can be a fair representation of the gold market and price in general, although the two may not move in total sync every step of the way.
There are a total of over 300 gold mining companies listed and publicly traded in various U.S. financial markets alone. They range from having a market cap of tens of billions of dollars and being actively traded on the Big Board, to below 50 million dollars in market cap for the many so-called nano-cap companies, a notch further below micro caps. The price of gold is increasing, so it is an ideal time to allot some money to investments in this precious metal. Individuals who purchase Gold Mining stocks are actually investing in the gold mine itself. This represents an investment on the supply side of the market, an alternative to the physical gold kept by investors, which may not be released to the market even when there is high demand.
In general, the performance of gold mining stocks tends to mirror that of the price of gold. There are more than 300 gold mining companies that are publicly traded within the U.S. These range from penny stocks to those worth over ten billion dollars. Investors currently see gold as a good investment because it can benefit from global weakness as well as inflationary pressure. For more information you can hit at: http://www.goldalert.com