Daily Archives: January 15, 2018

15Jan

What are gold stocks and how prices of gold affect them?

Gold is known as the precious metal and is used for different purposes like industrial, manufacturing, personal jewelry and more. This particular commodity is most actively traded on mcx as it is of highly liquid nature. A large number of traders rely on the usage of mcx tips of market experts to ensure their good earnings here. Gold stocks are those shares which traders hold in a gold company which can be either mining corporation or gold mutual fund.Like other stocks, this also makes a trader eligible to claim any profit that comes out of his investment made by him in gold stocks.
Following are the two popular types of gold stocks:
1) Large-Cap gold stocks
These stocks belong to companies which usually have large market capitalisation. Companies with large-cap stocks are more stable and are likely to be a part of a market for long term.
2) Junior gold stocks
Junior or mid-cap stocks are more volatile and belong to companies which are in the business of mining or exploring new deposits of gold and therefore their market capitalisation is also less.
Things to keep in mind before investing in gold stocks:
1) Determine the investment mode
There are different ways by which you can invest in gold stocks: directly in gold mining companies, gold mutual funds and gold ETFs. Each of them has their own advantages and disadvantages.Before spending your hard earned money in them learn about them and after that make a wise choice.
2) Stay updated with market
It is very important to keep yourself updated with daily market movements.This will ensure that you know everything about the investment you have made at any time.
3) Consider experts advise
At times certain emotional factors can influence you to take wrong decisions. Considering a financial advisor may cost some extra amount but it will ensure that you are making the right investment.
Impact of gold price on gold stocks
Price of gold is a primary factor which has to be considered while predicting or understanding prices of gold stocks.The reason behind this is, it is believed that when price of gold rise, gold stocks prices also rises and vice versa.But there are times when we see a strong movement in gold prices and there is not much impact of it on prices of gold stocks. Therefore it can be concluded by saying this though gold prices have its impact on gold stocks but the correlation between both will not be always same. To be on the safer side financial advisory services provider can be consulted to get experts advise on your investment and ensure that you are on the right track. Since high capital is required to trade here it is better to consider experts advise rather than making a wrong investment.
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