Buying miners any different than buying ETFs?

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FalseParadigm's picture
Joined: 07/08/2011
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Buying miners any different than buying ETFs?

Have a question I'd like you all to take a stab at.

Does buying stock in any of the gold or silver mining companies differ at all from buying an ETF?

Here's my thought process.

Like buying an ETF, buying mining shares essentially gives you a piece of paper that says you own part of a company that produces a precious metal.  When the final run on the dollar finally begins, panicked gold and silver buying will lead to a huge increase in gold and silver prices and thus, mining stocks will rise as well.  But I think the key question is, does it really matter?

First question: How desperate will the US government get when the world dumps our currency?  I'd say pretty damn desperate.  Raiding people's 401Ks, pensions, etc. is only phase one.  In the age of digital everything, what's stopping them from raiding your Ameritrade account? 

Second question: Even if the US government doesn't resort to that, you better believe that they'll hike taxes on pretty much everything.  Yeah, your mining companies might have done well, but selling them will only mean you receive worthless FRNs that will be taxed like crazy.  You're then left with worthless paper that nobody wants.

Is there really any reason to buy ANY paper (including PM miners)?  Seems like physical is the only solution.

Thoughts?  Am I missing something here?

Edited by admin on 11/08/2014 - 06:09
Larry L
Larry L's picture
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Buying miners any different than buying ETFs?

I guess when you come right down to it if you do not know much about the miner you are buying and knowing what is in the ground, is about the same as and ETF. Some people are saying the ETF's don't have all the PM's they say they have. After you buy an ETF they have to go out buy that PM for the account.

I have avoided ETF's and continue to trade the miners (ones that I know about). An ETF will basically trade 1:1 to the PM but a miner can give you much greater multiples.

Trade well,  Larry

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