Should You Buy Gold Stocks

by | May 15, 2020 | General | 0 comments

The price of gold is slowly inching up towards $1,800. I don’t think CNBC will start talking about gold until it reaches $2,000. To them, bitcoin is much more exciting.

One part of me is saying that gold absolutely should pass $2,000 because of all the money printing. Whether it will or not is a different story. Now days things that should matter don’t and things that shoudn’t matter do so it is hard to win in such an environment. The dumber you are, the better you will do.

Anyway, over the last 10 years, gold stocks have been terrible investments. I know because I lost a lot of money on them. It didn’t matter what the managements did, their stock prices fell. This is mostly because the price of gold was going down. Plus, the gold mining is a terrible business. It is very hard and if there is a way to fuck something up, the management will always find a way.

If the price of gold stays as high as it is today or it goes higher, then some gold stocks will be huge winners. Right now, I only have one horse in the race and it is Gold X which soon hopefully will become Gran Colombia if the merger goes through. Even if the merger does not go through I am happy to hold Gold X because the higher the gold price, the higher the value of Gold X’s property. There are other names that I am keeping my eye on but I don’t want to talk about the now.

If you want to get involved in gold stocks, then please educate yourself a bit. Know the difference between open pit versus underground mining. Know the difference between oxide versus sulphide ore. Know how these companies are financed.

Seriously, too many people don’t have a clue and they just listen to the people pumping the sector and lose huge amounts of money in the process. I wrote two books on the subject. I lost about $500k in this sector. The good part is that I lost my paper profits not my original capital.

I suggest you invest $20 in my two books so that you can at least be a bit educated. If you make huge amounts of money, then you will know how you made it. If you lose money, then you will also know how you lost it.

Gold Production from Beginning to End is a must read. It shows you how gold is produced from A to Z. How Gold Companies Finance Themselves Finance Themselves is the finance side of the business. It is private placements, royalties, forward sales, etc.

Will you ever hear the gold bugs talk about these two books? Hell no. They make money selling you newsletters, investment advice, bullion, or whatever they can think of. They have no incentive telling you about my books.

Most of the books about gold are pure garbage. I mean they are ok when it comes to gold. And then they say, “See gold will go up. So buy the miners.” There is so much more to it than just buying the miners.

Anyway, get my books, read them, and tell me what you thought about them. If you don’t like them, then all you will lose is $20. But if you don’t know what you are doing when it comes to the gold stocks, then you can only blame yourself for following someone blindly.

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About Mariusz Skonieczny

Mariusz Skonieczny is the founder of Classic Value Investors.