Gold Investment - Why invest in Gold Shares?

Investing in gold via gold shares or gold mining shares, remains for the strong hearted, because of all the risks attached when using such a method to invest in gold.  

However, it has its advantages which include (besides the fundamental reasons why investors should invest in gold)...

Value Sensitive to Price of Gold - The value of gold shares are believed to be highly sensitive to fluctuations in the gold price. In fact, more sensitive than even the value of a gold bar. The high sensitivity of the value of gold shares to fluctuations in the gold price, are simply because in the valuation of gold shares the following factors are used as a basis: 1. Expected profits during the life of the mine, 2. which are depended on the gold reserves, 3. and the gold mining productions costs in relation to the expected value of the gold extracted (which is indicated by the gold price).

In other words, if you want to make an investment in gold which is really closely linked to movements in the gold price, then it's probably best to invest in gold via shares. Investing in gold via shares thus offer high potential returns, but the investor needs to have an appetite for the higher than normal risks associated with gold mining, coupled with fluctuations in the gold price.

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