Page 85 - Introduction to investing in Gold

Buying mining stocks is a bit like buying real estate in the boom years. Many people bought property, did it up (sometimes just a lick of paint and new carpets), and then sold at a handsome profit.
They convinced themselves they were property developers, riding the bull market for what was a long time and made a lot of money in the process.
Sometimes, they did add genuine value, but more often than not, they didn’t. They were operating in a market which was literally on fire. Selling a few months after they bought, they were highly likely to make a profit because the market was so hot.
Investing in gold mining stocks can be similar. In a bull market, you could literally throw a dart at a list of gold mining stocks, and you’d be unlucky not to make money.
You mistake market moves for being clever. Never mistake “luck” for “clever”!
How to Avoid This Costly Mistake: Strategise
The right strategy is critical for your success. Everyone has a different appetite for risk and reward, but you need to make sure that your strategy is consistent with your intended outcome.
All mining stocks are different. Some companies are large producers with many mines across different countries, whilst others may not be producing at all. Their share prices vary dependent on exploration results.
Mining companies explore for or produce different commodities, so you must make sure they’re focusing on commodities you like.
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