Rua Gold Inc. (TSXV: RUA, OTC: NZAUF, WKN: H8E)
An Emerging Gold Explorer with Two Highly Prospective Land Packages in New Zealand’s historical gold fields.
Gold stocks and oil stocks are among the most popular commodity stocks. Gold is a precious metal that has been used as currency for thousands of years. Oil is a fuel for the modern economy. Both commodities possess various characteristics that sometimes make them highly attractive investments.
Investing in gold stocks and oil stocks is far more complex than investing in the commodities they sell. This article will delve into the investment prospects of gold stocks and oil stocks to help investors decide which one is more suitable for their investment portfolio.
Mature gold mining companies are similar to oil companies: they own productive land, produce commodities regularly, and often pay dividends. Profits and dividends fluctuate with changes in commodity prices.
Junior miners, on the other hand, are different. They typically own promising land where they can benefit if economically viable amounts of gold are discovered. If they discover a gold mine, the stock price may soar significantly in a relatively short period.
The main difference between gold stocks and oil stocks lies in the use of the metal. Gold is primarily used in jewelry, while oil is mainly used for transportation and industrial purposes.
Oil stocks differ from gold stocks in many ways. They are often more mature/stable, pay higher dividends (typically with high yields), and have more practical uses. For these reasons, quality investors often prefer oil stocks.
Taking the example of Canadian oil company Suncor Energy Inc (TSX: SU), the company sells crude oil, provides natural gas, and operates gas stations. How is Suncor Energy’s diversified oil and gas business doing? It seems relatively solid. The company’s recently released financial report showed profits exceeding expectations but revenue falling short. The decline in reported earnings this quarter was mainly due to non-cash factors, but the cash flow remains strong. Overall, Suncor Energy had a decent second fiscal quarter.
Taking everything into consideration, oil stocks may have the edge over gold stocks. While oil faces long-term risks of substitution and nuclear energy, petroleum remains necessary as a chemical feedstock. It is likely that we will still rely on oil in our lifetimes.
