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Gold Bugs Now Rush to Mining Stocks

By    |   Friday, 15 Jul 2011 08:40 AM

Gold has jumped higher in recent days, hitting a record of almost $1,595 an ounce Thursday. And investors aren’t just piling into the metal itself, they’re also diving into gold mining stocks.

While the SPDR Gold Trust, which invests in gold bullion, gained 0.9 percent Wednesday, Market Vectors Gold Miners, an exchange-traded fund that holds mining shares, soared 3.3 percent.

Rising gold prices mean higher profits for miners. Gold-mining stocks "move with the price of gold, but more dramatically," William Lefkowitz, options strategist for vFinance Investments, tells The Wall Street Journal.

gold200APuseme.jpg
(Associated Press photo)
Gold is rising amid concerns about Europe’s sovereign debt crisis and Congress’ willingness to raise the debt limit. "The gold story is a fear story," Lefkowitz says. "It's a bet on whether you think the U.S. government will find a resolution."

The precious metal’s ascent to a record high Wednesday helped spark options traders to push the Market Vectors fund higher. Trading volume for bullish calls to purchase the ETF hit a seven-month high Wednesday.

Many investors think gold can rise higher still.

“Gold will benefit from the turmoil,” Guo Hongjun, head of research at Haitong Futures, China’s largest futures broker by capital, tells Bloomberg.

“Another round of quantitative easing will hit the dollar hard, drive up prices of commodities including gold, increase inflationary pressures and slow the recovery.”

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Gold has jumped higher in recent days, hitting a record of almost $1,595 an ounce Thursday. And investors aren t just piling into the metal itself, they re also diving into gold mining stocks. While the SPDR Gold Trust, which invests in gold bullion, gained 0.9 percent...
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2011-40-15
Friday, 15 Jul 2011 08:40 AM
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