Here are 5 things you want to know before investing in gold stocks

Gold is soaring due to geopolitics chaos and overall uncertainty. As it usually does in such times.

Precious metals -and gold in particular- are considered a flight to quality move for investors of all sizes, and experience level.

Given the pain is not over…

Here’s your “Gold Investing 101” to help you get started:

Hey hey! I’m Paola Rojas. I’ve been investing for 17 years, and as a corporate advisor to miners and investors have worked on over $80m in deals. Most of my work has been focused on the metals and minerals used in the energy transition. But I digress. Let’s keep going!

I wholeheartedly believe gold has a place in every portfolio, whether in explorers, miners, royalty/streamers, ETFs, bullion, or any other derivatives.

In times of uncertainty, it just makes sense.

(lately a lot)

Before you buy a single share of a gold-focused miner or explorer, or any related security, these 5 concepts will set the stage for you.

These are the very basics that any experienced investor knows and uses to evaluate companies. You’ll be “in the know” if you start here.

1) Grade is king

Executives always talk about grade.

Normally, anything above 2g/t is great for vein systems.

Values above 20g/t or more, ‘bonanza grades’, could make the deposit highly profitable.

1-2g/t can still contribute, most typically as a by-product.

I’ve written more about grade in our free newsletter and also in our subscriber content.

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2) Track record

If you want dividends soon(er), consider choosing companies that have built a mine before (or executives).

Transitioning from explorer to producer is not an easy feat. Many fail doing it.

You can reduce your risk by choosing those that have already done it or expand their management team to gain that skillset.

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3) Byproducts

Typical mineralization will include other minerals alongside gold; usually silver and/or copper, but there are others.

These byproducts can boost the economics of the project substantially. And even make a project more investable, or for instance with copper, make it join in alongside the energy transition theme.

These byproducts will be processed and sold once the company reaches production.

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4) Bigger = better

Gold projects are classified in relation to their resources (inferred, indicated, measured) or reserves (probable or proven) in ounces.

A small mine can have reserves of 400-800koz, and a medium to large, several million.

Most institutional investors only invest in deposits with 1Moz and above (or the potential for it).

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5) High-value cargo

The logistics of a gold producer are different than those of miners producing concentrate.

Security is paramount, and a big part of its operating costs.

Air transport and armoured trucks transport the valuable doré bars from the mine site to refineries for further processing.

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That’s a wrap!

Gold stocks are my favourite way to gain exposure to gold, while earning dividends (if you invest in producers) plus capital appreciation (that blue sky we all love).

Summary:

• Grade is king
• Track record matters
• Byproducts
• Size matters
• High-value cargo