Gold, U.S. Jobs, and the Sequester: SPDR Gold Trust (ETF) (GLD), Barrick Gold Corporation (USA) (ABX), Newmont Mining Corp (NEM)

My long-term belief remains one of bullish optimism for gold as I do not think the economy is as stable as we would like to believe. In the short term, however, there are some real threats to manage. GLD, the gold ETF, continues to look more appealing than miners like Barrick Gold Corporation (USA) (NYSE:ABX) or Newmont Mining (NYSE:NEM) . Both Barrick Gold Corporation (USA) (NYSE:ABX) and Newmont Mining (NYSE:NEM) are facing similar pressures from rising production costs that interrupt the direct path from higher commodity prices to higher stock prices. Additionally, recessionary pressures, like those being exerted by the sequestration mess, tend to be negative for companies, but less so for pure commodity plays. The rationale for this last phenomenon is that while gold is a good store of wealth, gold miners are subject to the vagaries of a perceived or real recession.

If you have the stomach for something of a wild ride, GLD still looks appealing. If, however, you prefer a greater degree of stability, a reduced allocation, or even a break from gold, might be advisable. When gold begins to run, as I believe it will, it may do so with a low level of participation because of the current volatility — these are the factors you must weigh when deciding how to proceed.

The article Gold, U.S. Jobs, and the Sequester originally appeared on Fool.com.

Fool contributor Doug Ehrman has no position in any stocks mentioned. The Motley Fool has no position in any of the stocks mentioned.

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