Jun 072011

Gold has long been regarded as a safe haven for investors. Although stocks may fluctuate rapidly during market booms and busts, gold is usually relatively stable and can protect against evils that other investment tools cannot (such as hyperinflation – if this were to ever happen, gold would inflate on an equal scale, whereas stocks and other investments may not). However, due to this fact, gold also tends to be a relatively flat investment and may not provide the returns that other investments, such as stocks, can provide. As such, if you want some of the security that gold provides with the return potential of the stock market, you may wish to invest in UK gold mining shares.

UK gold mining shares are traded publicly and are generally a part of the FTSE or may even be traded on the AIM. Generally speaking there are two popular shares that are highly recommended for beginning investors. African Barrick Gold (LSE: ABG) is probably the safest investment for those looking to reap the benefits of gold. With a net income of 136 million GBP in 2010, this is a very secure stock to be in. They are the largest miner of gold in Tanzania, and their IPO was just done very recently (originally they were a part of Barrick Gold – one of the largest miners in the world). While Barrick Gold is perhaps the more safe investment with its long rich history of returns, being a new company with a very solid mining capacity, ABG is probably the better buy in the long run for risk versus reward. There is very little downside, but amongst UK gold mining shares, it has a very strong potential.

The second mining share that is highly recommended for beginning investors is Highland Gold Mining (LSE: HGM). Backed by Russian billionaire Roman Abramovich, Highland Gold is poised to be one of the world’s leading gold stocks in the coming years. It suffered some losses in 2008, but has turned quite profitable and is seeking to expand its operations in the coming years. Its primary focus will be Russia whose gold deposits are second only to that of South Africa, and so far have been relatively untapped. With the potential for the Russian government to permit mining in new locations, HGM is in prime position to expand its operations and become a very profitable stock for investors. As such, it is probably the next best stock for beginning investors to own as its reward to risk ratio is quite high.

There are many UK gold mining shares, but the above two are the ones that every investor should have. This is especially beginning ones looking for something stable but also wanting to realize a moderate return. Regardless, gold mining is probably one of the best stock segments to be in as it is reasonably safe, but has a very bright outlook.  As such, strongly consider adding one of these UK gold mining shares to your portfolio. Chances are you’ll be very happy you did later on.

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