The Wild & Woolly Gold Stocks!

If one loves to ride a roller coaster, then owning gold stocks may be for you. The above chart of the Philadelphia Gold & Silver Exchange (XAU) is enough to give anyone that sinking feeling one gets while riding a roller coaster. On a roller coaster when the drop comes, you have the feeling that your stomach is floating in your chest. As to your heart well……
Note: I am using the XAU because the XAU has the longest history. Normally I use the Gold Bugs Index (HUI) and TSX Gold Index (TGD). The XAU contains Freeport McMoran (FCX-NYSE) a company that is predominately copper rather than gold and silver. As such, I find both the HUI and the TGD more properly reflects the gold and silver stocks. The XAU is an index of 30 stocks vs. 18 stocks in the HUI and 40 stocks in the TGD. Some stocks are common to all three indices.
I am sure those who have survived through the most recent gold stock ‘drop zone’ have the same feeling as one would have being on a roller coaster. The trouble is, as everyone knows, when you are on a roller coaster you can’t exactly get off at the top. The vicarious thrill of the roller coaster is going through the drop. As to whether one gets a vicarious thrill of continuing to own gold stocks through the drop is not known. Some people even ‘hurl’ during the drop. The good news is as with a roller coaster, one eventually hits the bottom and the long ride to another top gets underway.

This post was published at Gold-Eagle on November 27, 2014.