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Gold Mining Stocks: What you Need to Know Before You Invest

Gold stocks have had an impressive run over the past year, and with gold hitting record high prices in earlier this month, you may be thinking about investing.  But just like any investment, you had better learn the basics or you risk getting burned.  Understanding a few key elements about gold stocks and the gold industry can protect you from excessive financial risk, and provide a safer path to market-beating profits.

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It’s important to remember that gold stocks are first and foremost, stocks.  So approach gold stocks as you would any other investment… by doing some research at the Motley Fool!  The Motley Fool is a fully independent investment resource that is a great place to begin your research on gold stocks. If you make your own investment decisions and you’re not familiar with “The Fool”, then you need to start taking advantage of their high quality and free investment advice for ALL of your investments.

The Fool provides 2 great things that can help increase your knowledge of gold stocks very quickly: (1) free articles written by Motley Fool analysts, and (2) free stock ratings from their Motley Fool CAPS investor community.

Let’s talk about #1 first and see how it can quickly boost your gold stock knowledge.  Motley Fool analysts provide smart, savvy and brutally honest commentary on specific investments and investing in general through free articles that are posted to the Motley Fool site.  By just doing a 30-second search for “Gold Stocks” on the Motley Fool site, we found the following great articles:

Got Gold? – A discussion of major and niche gold stocks and their prospects for the coming year.
You Are About To Make a Bad Investment – A case against investing in gold and gold stocks.
Dueling Fools: Gold – 2 of the Motley Fool’s best analysts (1 pro-gold, 1 anti-gold) square off on gold stocks and gold in general.

That’s some incredibly targeted information on gold stocks and it was obtained with little or no effort.  At the bottom of each of those articles are links to other relevant gold and gold stock articles, so just by reading a little and following the web of information at the Fool, you can dramatically increase your gold stock knowledge in just 30 minutes!  If it’s your hard-earned cash that’s at stake, then make the time and spend an extra half an hour learning about gold stocks before you jump in.

The 2nd outstanding resource on the Fool that can greatly increase your gold stock knowledge is Motley Fool CAPS.  The Fool is home to one of the largest communities of independent investors on the web, and CAPS is an online service that allows that community to interact and rate and tag stocks.  CAPS determines which participants are best at accurately rating stocks (based on market performance) and which stocks the community thinks will perform the best over time.  This information is totally free and available to everyone, so you can go to CAPS right now and find out what stocks are rated the highest within every industry and which CAPS participants are best at picking stocks. 

Here’s how you can put CAPS to work for you in your gold stocks research. This link will take you to the “Gold” page at Motley Fool CAPS.  The “Gold” page shows stocks that are relevant to the gold industry and the ratings for each stock as supplied by the CAPS community.  Here we see that the following gold stocks are rated the highest on CAPS:

  1. Rubicon Minerals Corp. (USA) (RBY)
  2. Central Sun Mining Inc. (SMC)
  3. Miramar Mining Corp (USA) (MNG)
  4. Western Goldfields (WGW)
  5. Yamana Gold, Inc. (USA) (AUY)

Each of the above gold stocks has its own page on CAPS that contains detailed financial information and metrics, links to relevant Fool and outside news articles, and CAPS community opinions.  This is a great way to begin to get more specific gold stock investment ideas and again, all of this information is completely free and unbiased and doesn’t even require you to provide an email address.  Many of the CAPS users also have blogs on CAPS where they talk about their investments, so if you find a gold stock you like, read the user posts (both positive and negative) to get a fuller picture of why other people like or dislike a stock.

Should gold stocks be part of your portfolio?  Maybe.  There are a lot of opinions out there, but as with any investment, you ultimately need to determine that for yourself.  The Motley Fool tools mentioned above are free and can help you to greatly increase your gold stock knowledge.  If you’re thinking about investing in gold stocks, take 15 minutes to explore the tools above.  You will probably end up spending more time than that once you have sampled the high quality information that is available.  Knowledge is critical to making money investing in any stock sector, and gold stocks are no exception.

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