Should investors hold bullion or buy stock in mining companies?
Because we view gold as a form of insurance, we prefer the safest gold investment–gold that we have in our vault, gold that’s free of mining risk and accounted for. At the same time, we recognize that gold bullion isn’t always the cheapest way to access this insurance policy; we use a proprietary model that examines a mining company’s proven and probable reserves and the total cost of extracting those ounces from the ground. The model then compares these factors to spot price of gold. If there’s a significant margin of safety between reserves and the spot price of gold, we invest in that company. Absent those opportunities, we invest in bullion. Would you recommend that individual investors maintain a mix of bullion investments and gold-related equities holdings? It makes sense to have a mix of both bullion and gold-related equities; the key is determining the cheapest way to add gold exposure. Outside of owning a gold fund, the easiest way for individual investors to gain exposure to
