Why Gold Miners' Shares Popped


Although we don't believe in timing the market or panicking over market movements, we do like to keep an eye on big changes -- just in case they're material to our investing thesis.

What: Shares of gold miners Goldcorp (NYS: GG) and Royal Gold (NAS: RGLD) have jumped 10% today as gold becomes the "it" trade on the market again.

So what: As usual, bad news for the economy is good news for gold. The shiny metal is up 3.8% as I am writing and appears to be back as a hedge against a bad economy and more easing from the Fed. Today's jobs report has spurred fear (or hope, depending on your perspective) that the Fed may institute QE3, which should drive the price of gold higher.

Now what: As gold goes, so go gold mining stocks. The jobs report certainly showed a lot of weakness in the economy but I still think a bet on gold is speculative. The jobs report has gone through ebbs and flows over the last year -- this may be a bottom, just like we saw last year. These stocks are too risky for me right now and I'd rather bet directly on gold through an ETF like SPDR Gold Shares (NYS: GLD) than a leveraged play with miners.

Interested in more info on gold miners? Add Goldcorp to you watchlist byclicking here. Add Royal Gold to you watchlist byclicking here.

At the time thisarticle was published Fool contributor Travis Hoium does not have a position in any company mentioned. You can follow Travis on Twitter at @FlushDrawFool, check out his personal stock holdings or follow his CAPS picks at TMFFlushDraw.Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

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