1. Only Physical Gold is your long term hold, they outperform the average large cap gold stock
2. But if you must invest in Gold stock, larger cap gold stock outperforms small cap/junior gold stock
3. Junior gold stocks are short/medium term speculative wonders - you know that right? Don't cite an individual multi-bagger, we are talking about the average junior gold stock. And even those multi-bag junior wonders can be just short term outperformers.
Gold stocks are not meant for long term hold especially once the cycle ends because
1. Central banks don't buy gold stocks, and anyone wanting a real safe haven in times of adversity buy Physical Gold, not gold stocks
2. They are subjected to management folly and all sorts of operational risks, fact is it is getting harder to extract gold (the low hanging fruits of gold extraction is over) cheaply, hedging and jurisdiction risks, grade and production risks
3. Gold stocks have suffered larger selloffs than stock indices during market collapses
4. Gold stocks could get prematurely taken over in a predatory/opportunistic M&A at less than its future potential, capping your returns or get swapped into a larger gold outfit with less upside (larger caps typically have less %upside) OR they pay substantially more than they should in poor M&A decisions (e.g Barrick Gold).
5. Gold stocks make periodic capital raisings (CR), so if you had bought into the peak that is followed subsequently be a hefty discounted CR, it could make the gold stock underperform much longer.
6. Choosing the right gold stock to invest can be tricky, most have a portfolio of various gold stocks so chances are you have both winners and losers and hope the winners come out on top, but sometimes just one lemon (eg SBM) is enough to cause underperformance
