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Positioning yourself for the Ride of a lifetime

When you begin to think about getting into a Gold market you have a few different choices.

You can choose to invest in Physical Bullion in the form of Gold & Silver Coins. The most popular and liquid coins available today are the American Eagle 1 OZ Gold Coin or the Canadian Maple leaf 1 OZ Gold Coin.  The same goes for Silver. The American Eagle 1 Oz Silver coin of the Canadian Maple leaf 1 OZ Silver Coin. These are great places to start any entry into the Gold and Silver Market. If we take a look at the last time we saw the Gold and Silver Markets Climb we will see that the Price of a 1 OZ American Eagle Gold coin in 2001 was available for about $375 the US, at the end of 2011 that same coin was worth about $2000. From an investment standpoint you would have made 6 times your money if you would have been able to cash out at the peak of the market. If you would have help onto that same coin bought in 2001 today 15 years later you would be able to sell if for about $1350 US giving you close to 450% gains on your money. When we look at the same investment in the S&P 500 over that same 15 year period you would have seen a 60% return on your investment. So you can see what a true Gold Bull Market can do. Are we there today? We might be.

 

Another way to invest in Gold in buying Gold Stocks or Gold and Silver ETF’s. Gold Stocks are a little more volatile than just investing in the Physical but for good reason. Gold companies have great risk involved in finding the Gold, Extracting it from the ground and processing it. Gold Mining Companies could take up to 10 years of digging before they even pour their first Gold Bar. Building a Mine could cost in excess of $1 Billion Dollars. So there is great risk involved, however, there is also great Reward. A good example of a recent Gold Company that went into production a few years ago and saw their share price rise dramatically once they went into production is Detour Gold. In 2008 Detour Gold stock was trading for about $3.50. Today it is trading close to $35. That is a 1000% increase in price or what some people like to call a Ten Bagger. Making Ten times your original investment. In less than ten years. That would turn a simple $10,000 investment into $100,000. Not bad for a company that was in a safe jurisdiction, they had all the right boxes checked when it came to Due Diligence. Well financed, good grades, Solid Management team leading the way. Was there any risk yes but everything turned out better than expected for Detour Gold and the shareholders who hung onto the shares during some of the rough times during the past couple of years waiting for the price of Gold to Rise got handsomely rewarded.

 

Now this is not how it always turns out. Another good example is what happened to Rubicon Minerals in the Historic Red Lake District of Ontario Canada. Again, if you had done all your Due Diligence you would have found that this company and stock checked all the right boxes too. Again in a safe jurisdiction in Canada, In the Historic Red Lake District where Millions of ounces had been discovered before. The management team was solid and in place and well-funded and fully financed to production. During the Exploration stage of the Company and before even construction of the actual mine in 2010. Rubicon minerals were trading as high as $5.50 a share. As the price of Gold started to fall after 2011 so did the share prices. And by the time the mine was built the shares were trading at about $1.30 a share. Once they officially announced that they had achieved production and their first Gold Pour they realized that the Grade of Gold were not what they expected them to be and they shut down the mine for further investigation only to later realize that additional funding needed to be done and more drilling and to this day today June 29th, 2016 the Mine at red lake Ontario is closed. A brand new mine built, almost $700,000 spent. The share price today of Rubicon Minerals is .05. That is a 5000% drop in share price from its highs of 2010. I only mention these two examples because it shows you very clearly the risks in investing in Gold Stocks versus just buying Physical Gold in the form of Bullion Coins.

So if you do decide to get into Gold or silver investing and hoping to catch the Ride of a lifetime make sure to do your homework. Spread yourself out over some position in Physical bullion like Coins and others in Stocks. If you are lucky you will defiantly have a Ride of a lifetime.

 

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