Investors often ask “why do gold stocks often move at a much higher rate on a percentage basis than the price of gold itself. The fact is that Gold stocks can give investors much greater upside “leverage” over the price of gold bullion. For example, if the price of Gold moves from $1200 to $1400, the return is approximately 16%..Not bad! But with the same $200 increase in gold a $4 gold stock can rise to $12 or more, that is a return of 100% to 200% and often it is much more. In a small cap “junior” we can often see 1000% to 1500% moves up.  That enormous difference in the returns is the reason why successful gold investors buy the gold stocks instead of the actual gold bullion (or gold ETF’s). Yes, that is the primary reason that makes many of the gold stocks so attractive when the price of Gold bullion is rising.                                            Here’s an example of how it works… Producing gold mining companies generally have a fixed cost to produce (the all-in cost). It doesn’t matter if gold is selling at $900 or $1400 or at $1500 an ounce… the mining company’s costs generally stay the same. Now if a mining company is producing gold at $1200 an ounce… and the gold price is $1300 an ounce… the company makes a profit of $100 an ounce…..But if the price of gold climbs to $1500, the company  will make a $300 profit per ounce. That’s a huge 200% […]