subject: Find Money With Gold Explorers [print this page] The interesting correlation of Gold spot prices and Gold explorer equities perfectly defines the current market appetite for risk and a general outlook on Gold.
When silver spot values cool down, there is no way for the Gold but to move up and in a scenario like this Junior miner and exploration companies may gain much higher than the metal producing entities.
If Gold prices go up by 10% today, a Gold exploring companys stock may touch a 20% or a possible 100% high if the chosen stock has struck a goldmine. Literally!
The last years inverse relation of these two products of the same asset class have somehow found a common road this year and all the reasoning points to the increased investor confidence in Gold, its spot prices and other related investment products. In an improved market scenario investments in gold exploration stocks may yield higher than other gold vehicles considering they are also riskiest of the lot thus affirming the markets laws of Risks and Rewards.
What has changed exactly for Gold in 2012?
Well, nothing much has changed for noblest of the metal. It is still on the track with only cyclic corrections, it is the regained conviction of the investors that has turned the game around in 2012.
Vis a Vis market last year, 2012 has been much a better ground for the high reward players. 2011 was a time where disaster ruled in the form of Euro Crisis and Arab spring among others, squeezing the markets out of any risk appetite or whatever of that may have existed after close to 20% downside. What Panic Sellers failed to notice was that Gold spot valuations were still up for the same year.
2012 is a different storyGold Is Back and so is the risk appetite for it!
Suddenly everyone is bullish on Gold. The twelve year old rally surges on and the analysts who were just last year caught on tape announcing the death of the robust bullion bull are now taking a U-Turn.
Whether it was the +12 % correction of 2010 or the 28 % crash of 2008, the metal is still in a long standing rally where these downsides are only a natural outcome of a controlled environ.
Playing Venture Capitalist with Gold!
Acquiring a Gold Explorer ETF, today will appeal to the investor with a venture capitalistic approach or even someone fishing for a high reward opportunity. To begin with, most of the exploration companies are yet to post any earnings, and in return require uninterrupted cash flows for the treasure hunts. Cash register rings when they fumble upon a sizable deposit and the stocks rake to as high as 200%. The initial furor sets in only to loose its steam when people realize that it may take another few years for any consumable gold could be produced from the new found mines.
The Bottom Line
It is a short window that it offers, often favored by the seasoned capitalist who is looking for a short term exposures on start ups etcetera to cash in on the beginners luck.
Buying into Gold Explorer ETFs is an effective way to play with Gold as a venture capitalist, where one gets uniformly exposed to the 20 most liquid stocks that make the Solactive Gold Explorers Index. As long as you have a long term positive outlook on the metal, purchasing a Gold Explorer Fund gets you a ticket to each of these future market multi-bagger shows and clearly a high potential yield as compared to other gold centric investment products.
Already Long?
Apart from the venture capitalism in to gold , The explorer funds complete the full circle for the top prize aspirants who have existing long term investments in bullion and physically backed funds and not shy to make risk calls.
