• Subscribe
  • Log In
  • Home
  • Daily Diary
  • Asset Class
    • U.S. Equity
    • Fixed Income
    • Global Equity
    • Commodities
    • Currencies
  • Sector
    • Basic Materials
    • Consumer Discretionary
    • Consumer Staples
    • Energy
    • Financial Services
    • Healthcare
    • Industrials
    • Real Estate
    • Technology
    • Telecom Services
    • Transportation
    • Utilities
  • Latest
    • Articles
    • Video
    • Columnist Conversations
    • Best Ideas
    • Stock of the Day
  • Street Notes
  • Authors
    • Doug Kass
    • Bruce Kamich
    • Jim Cramer
    • Jim "Rev Shark" DePorre
    • Helene Meisler
    • Jonathan Heller
    • - See All -
  • Options
  • RMPIA
  • Switch Product
    • Action Alerts PLUS
    • Quant Ratings
    • Real Money
    • Real Money Pro
    • Retirement
    • Stocks Under $10
    • TheStreet
    • Top Stocks
    • Trifecta Stocks
  1. Home
  2. / Investing
  3. / Basic Materials

Defending Against Gold Mining Stocks

Buy the bullion, the coins, or the real proxies as too much can go wrong with the mining stocks.
By JIM CRAMER
Oct 19, 2011 | 12:42 PM EDT
Stocks quotes in this article: GLD, IAU, AEM, GG

People are always asking me how come I don't recommend individual gold stocks vs. the SPDR Gold Shares (GLD) or the iShares Gold Trust (IAU), which we own for Action Alerts Plus.

You want to know why? Take a look at Agnico Eagle (AEM). That is exhibit A in my defense against pounding the table for any gold stock. It is down hideously today because one of its most important mines has been shut down and taken off line. A major pillar to the story is gone, as the company announced that mining at the Goldex field in Canada has been suspended indefinitely because of flooding.

This is the kind of crushing blow that makes you find yourself thinking, "How could I have bought this stock as a proxy for gold when there is an actual proxy for gold in the stock market?" "How could I have missed the whole gold move because of this stock?"

Agnico Eagle has been one of the great, growth gold stocks because of its aggressive expansion. But the screw-ups in the last year are unfathomable. It is simply amazing how much can go wrong.

Isolated? Nope. When Goldcorp (GG), reported its last quarter, which was a huge miss, it cited blunder after blunder, many of them caused by natural disturbances like floods and fires.

Again, you missed the gold move that you probably wanted to capture if you owned GG, and that is one of the finest miners in the world.

Remember, these two stocks next time you say "Hey, I gotta get some gold, who is mining it and making fortunes." The execution risk is humongous, the payoff if everything goes right simply not worth it.

You want gold? Buy gold. Buy the bullion. Buy the coins. Buy the real proxies as we have for Action Alerts Plus.

Just don't by the stocks.

You might find yourself down 10 bucks on a mine shutdown the way people are right now who own AEM, a stock that was already down about 30% for the year, despite this year's big rally in gold, one that, by the way, hasn't been repealed despite endless grousing about how the gold bubble is about to burst.

Oh and get this, if you owned this stock for the last two years you are actually down on it. During this period, GLD rose an astounding $58 to $160 from $102! And, with that, the gold stock prosecution rests.

Get an email alert each time I write an article for Real Money. Click the "+Follow" next to my byline to this article.

Action Alerts PLUS, which Cramer co-manages as a charitable trust, is long IAU.

TAGS: Commodities | Markets | Basic Materials | Investing | Gold

More from Basic Materials

With Lithium Americas, We're Seeing a 'Trifecta of Triggers'

Timothy Collins
Feb 8, 2021 1:30 PM EST

It's hard to call a stock that doubled over the past six months oversold, but that is indeed what we see.

A 4.7% Yield With a Decade of Dividend Increases

Bob Ciura
Feb 5, 2021 2:45 PM EST

Sometimes high dividend stocks have a secure dividend with room for future dividend growth. These can be among the best opportunities for income investors.

Looking for Higher Highs After a Trex Correction

Bruce Kamich
Jan 22, 2021 12:20 PM EST

Some new accumulation (buying) around the $85 area should set the stage for further gains.

PotlachDeltic's Charts Are Strong Like the Housing Market

Bruce Kamich
Dec 30, 2020 10:45 AM EST

Here's where aggressive traders could look to go long PCH.

Iron Ore Soars, But Will the Pinch Between Supply and Demand Continue?

Maleeha Bengali
Dec 9, 2020 10:00 AM EST

For now, China's infrastructure-led stimulus efforts are helping drive demand for iron ore at a time when production is under pressure.

Real Money's message boards are strictly for the open exchange of investment ideas among registered users. Any discussions or subjects off that topic or that do not promote this goal will be removed at the discretion of the site's moderators. Abusive, insensitive or threatening comments will not be tolerated and will be deleted. Thank you for your cooperation. If you have questions, please contact us here.

Email

CANCEL
SUBMIT

Email sent

Thank you, your email to has been sent successfully.

DONE

Oops!

We're sorry. There was a problem trying to send your email to .
Please contact customer support to let us know.

DONE

Please Join or Log In to Email Our Authors.

Email Real Money's Wall Street Pros for further analysis and insight

Already a Subscriber? Login

Columnist Conversation

  • 08:09 AM EST GARY BERMAN

    Monday Morning Fibocall for 3/1/2021

    Always a good idea to know where our bounce zones ...
  • 11:51 AM EST REAL MONEY

    Watch Bob Lang and Doug Kass Discuss Short-Selling!

    Bob Lang and Doug Kass with an engaging and educat...
  • 11:32 AM EST JAMES "REV SHARK" DEPORRE

    This Weekend on Real Money

    Navigating a Market Correction
  • See More

COLUMNIST TWEETS

  • A Twitter List by realmoney
About Privacy Terms of Use

© 1996-2021 TheStreet, Inc., 225 Liberty Street, 27th Floor, New York, NY 10281

Need Help? Contact Customer Service

Except as otherwise indicated, quotes are delayed. Quotes delayed at least 20 minutes for all exchanges. Market Data & Company fundamental data provided by FactSet. Earnings and ratings provided by Zacks. Mutual fund data provided by Valueline. ETF data provided by Lipper. Powered and implemented by FactSet Digital Solutions Group.

TheStreet Ratings updates stock ratings daily. However, if no rating change occurs, the data on this page does not update. The data does update after 90 days if no rating change occurs within that time period.

FactSet calculates the Market Cap for the basic symbol to include common shares only. Year-to-date mutual fund returns are calculated on a monthly basis by Value Line and posted mid-month.

Compare Brokers

Please Join or Log In to manage and receive alerts.

Follow Real Money's Wall Street Pros to receive real-time investing alerts

Already a Subscriber? Login