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Not sure why we're double-posting, but here's my take...

I think owning gold is a great idea for asset allocation... I would suggest that one split his or her gold money between the ETF GLD and a mining stock (NEM is a very good one - disclaimer: I do own NEM shares)

The reason I suggest a mining stock is because they have more leverage... The ETF GLD represents physical gold. With gold at nearly $500 an ounce, if it does go to $1000 an ounce, you'll double your money....

However, mining stocks are likely to do much better than double if gold goes to $1000 an ounce....

Assume that it costs $250 per ounce to extract gold from the ground... Right now, the profit per ounce is $250 per ounce. If gold goes $1000 an ounce, the cost to extract gold will remain the same, but the mining company's profits will triple...

See what I mean??

It also works in reverse... A small dip in the price of gold will cost you more in the mining stocks than if you owned gold itself through the ETF.


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