What Are the Differences Between Gold and Mining ETFs?

Tom Lydon (ETF Trends) submits:

Just because you hold gold or precious metals in your ETF portfolio does not mean that you have exposure to the actual metal or mining shares, which are two completely different investments.

Owning physical bullion is the lowest-risk way to invest in precious metals and is not subject to changes in production costs, says Nick Barisheff, Bullion Management Group on Goldseek.

Here are a few other points about the difference between gold bullion and the mining stocks and ETFs:

• On a rising trend, mining stocks are correlated to metals. In a downward market, they are closely linked to broad equity markets.
• Physical gold bullion is the best diversification tool for a portfolio and offers risk protection; two gold ETFs hold physical bullion and give investors the benefits of owning gold without the hassle of finding storage for it.

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