Gold miners: Play the little guys
Today's Financial News - Posted November 12, 2009
Gold prices are closely watched these days, especially by Uncle Sam. There’s a new ETF that lets you take advantage of all the speculative action.
By Andrew Snyder, TodaysFinancialNews.com
Baltimore – (TFN): Gold is a popular topic these days. With the dollar sitting at 15-month lows and America’s debt growing by staggering proportions, bullion bugs have every reason to send prices higher.
As gold prices continue to stretch further and further into record high territory, Washington is screaming, “Go, baby, go!”
That’s because our leaders know they are sitting on the largest stash of gold anywhere in the world. The higher gold prices go, the more they can borrow and the more they can spend.
At last report, Geithner and his Treasury were sitting on 261.5 million ounces of gold.
Sounds like a bunch, right? But when you multiply it by the $1,115 each ounce is currently trading for, the figure comes out to just about $290 billion.
That’s a ton of money for you and I.
But for Washington it’s a drop in an ocean of debt. If the Treasury suddenly unloaded its gold, the proceeds would merely keep Uncle Sam from issuing debt for just two weeks or so.
Error: Insufficient collateral
Other than our word, gold is about the only collateral the country has these days. With $12 trillion in debt and just $300 billion to back it up, lenders have got to be getting nervous.
That is exactly why Geithner may say he is for a stronger dollar, but is doing very little to stop its slide. A weak dollar is good for gold prices, which is good for a country increasingly burdened by debt.
Fortunately you and I can take advantage of the country’s unspoken desire to send gold higher.
By now, you must be aware of the many ways to take advantage of a bullish gold market. There’s bullion, coins, mining stocks, ETFs, mutual funds, you name it.
But you may not have heard of Van Eck’s latest ETF, Market Vectors Junior Gold Miners (NYSE:GDXJ). The exchange-traded fund offers investors a stake in 38 small and mid-sized gold miners.
For investors looking for a bit of extra leverage while playing the gold market, the ETF is a good play.
Junior miners are speculative companies. Most of them have yet to produce gold and some may be more than a decade away from production. But when they do prove an economical find, oh boy, hold onto your hat.
Even though the Junior Miner’s ETF was debuted just yesterday, it is already proving popular. It is a sign that many of today’s investors are looking for a bit more speculation and a shot at the large gain potential held by the nation’s smallest publicly traded firms.
That is fantastic news for many of our readers. After all, they just became the first members of our latest service, Penny Stock Confidential, a members-only advisory that seeks out and recommends the best of the nation’s up-and-comers.
The new gold ETF may not be in our portfolio, but you can bet some of its holdings will wind up on our “buy” list.
Gold is a good buy, but small, speculative gold miners are even better.
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