Gold's Recovery: Physical or Miners, Which Path Should You Take?
Gold prices have recovered to around US$4,500 an ounce after falling from their January record. Investors are now wondering whether to buy physical gold or invest in ASX-listed gold miners like Northern Star (ASX.NST), Evolution Mining (EVN), and Newmont Corp's Chess Depository Interest (NEM).
The decision depends on what role investors want gold to play in their portfolio. Physical gold offers diversification benefits as it has historically had a low correlation with shares and other risk assets. It is an asset without an issuer, making it less susceptible to credit risk.
On the other hand, investing in gold miners comes with operational risks associated with mining operations. However, miners can benefit from operating leverage, where higher gold prices increase profit margins significantly.