Though the price of gold has tumbled since peaking in late 2011, it’s still much higher now than was 10 years ago.
Some advisors may suggest an allocation to gold, either in an ETF that holds gold bullion or in a fund that holds mining stocks. True gold bulls likely will prefer mining stocks, because miners may have operating leverage: a company that produces gold at $1,200 an ounce, for example, would see profit margins rise by 20%, from $250 to $300 an ounce, if the price of gold goes up about 3.4%, from $1,450 to $1,500. Higher margins, in turn, may be reflected in stock prices.
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