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Tickers in this Article: KGC, NG, GLD, SA, AUY
During periods of crisis, investors will typically flee risky asset classes and invest in assets or commodities that they feel will hold value. Gold is a prime example.

Gold is relatively rare and it is respected across borders. Currencies may come and go, but the theory is that the value of gold will live on. Also, it's important to note that it has proved itself over time. Historic charts show that gold spiked from about $150 dollars an ounce in the mid-1970s to more than $800 an ounce in 2008. (Think the value of gold is unshakable? Read The Gold Standard Revisited to learn of its rise and fall.)

So how can the individual investor go about investing in gold?

While collecting jewelry with a high gold content or gold coins is the preferred method by some, there are downsides to consider. For example, there is the issue of finding a safe place to store such merchandise. Finding a buyer for a particular piece may also be difficult. Plus there is sometimes a very big markup on certain pieces.

There is an alternative for investors to gain exposure to gold: the stock market. Below is a list of five gold plays easily accessible to the individual investor.

Company/ETF
Market Capitalization
Kinross Gold Corporation
(NYSE:KGC)
.9B
NovaGold Resources
(AMEX:NG)
5M
Seabridge Gold
(AMEX:SA)
4M
SPDR Gold Shares
(NYSE:GLD)
Net Assets .26B
Yamana Gold
(NYSE:AUY)
.42B
Data as of market close July 21, 2008.

The Risks
While gold has fared well in the past, there is no guarantee that it will do so in the future. Another important thing to understand is that the price of gold can fluctuate widely. In 1980 the price of gold had risen to about $850 an ounce, a huge increase given that just a couple of years prior it was trading under $200. But, not too long after that spike, gold lost a bit of its luster. Long story short, the price floundered until 2005 when interest started to pick up again.

Investors who purchased at or near the top of the market in the 1980 time frame had to wait about 25 years to recoup their investments. (To learn how to combine technicals and fundamentals to confirm trends in this commodity, read A Holistic Approach To Trading Gold.)

Kinross Worth Its Weight in Gold?
Based in Toronto Canada, Kinross Gold Corporation is the third largest primary gold producer in North America by reserves. It sports operations both here in the U.S. and in South America as well as in far-off places like Eastern Russia.

Not surprisingly, Kinross's shares have faired well this past year as interest in all things gold perked up. Going forward, if its first-quarter revenue growth is any indicator I think that the shares could see some upside from here. During the first quarter, Kinross generated $330.2 million in revenue, which is a roughly 34.4% increase over the $245.7 million it put up in the comparable period last year.

It is important to note, however, that during Q1 its earnings were $70.9 million, or 12 cents per share, which isn't overly impressive given that in the same period in the last year it earned $68.5 million, or 16 cents per share. Kinross said year-over-year earnings per share were hurt a 39% increase in the number of shares outstanding, primarily as a result of the Bema acquisition in early 2007. Bema Gold Corporation was a gold producer with operating mines and development projects around the world.

As things stand right now analysts are expecting the company to earn 68 cents a share this year and $1.12 per share in 2009. That's pretty impressive. As a bonus, the shares pay a small dividend. The current yield is 0.20%.

Bottom Line
Over time many investors have flocked to gold particularly during times of crisis. I expect that its widespread international acceptance and recognition will cause this trend to continue. A little exposure to gold may help to mitigate the overall risk of your portfolio.

For further reading, check out Does It Still Pay To Invest In Gold? and Getting Into The Gold Market.

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