Insiders say that Northern Star’s acquisition of Pogo mine in Alaska was risky trade. Low-risk gold investors, with the expectation that the Pogo acquisition will not return them a profit would most likely shy away from it. Northern Star’s Executive Chairman, Bill Beament, being a gold speculator, may have purchased the Alaskan mine with the belief that it will strike them gold. How do you even distinguish a gold investor from a gold speculator?
What’s the difference between a gold investor and a gold speculator?
To determine whether Bill Beament is a gold investor or a gold speculator, let us have an overview of their differences.
A gold investor buys and sells securities such as stocks and bonds. They typically buy and hold an asset for the long-term. Investors purchase with the expectation that the stock will increase in value. They sell shares that may decrease in value with the expectation of repurchasing when at a lower price.
A gold speculator is someone who makes a profit by buying low and selling higher. A gold speculator is interested in gold price action, while a gold investor is interested in dividends. Gold speculators are typically likened to gamblers. They take on risks, especially when anticipating future price movements, with the hopes of raising revenues that are big enough to offset the risk. A speculator uses new strategies or methods in a shorter time frame with the intention of outdoing traditional investors. This appears to describe Beament’s Northern Star and how the gold miner utilized a new mining method in Pogo — the lone-hole stoping method was introduced in place of their old methods, which were the cut-and-fill and drift-and-fill methods.
The bottom line is, the primary difference between a gold investor and a gold speculator is the amount of risk they undertake. High-risk gold speculators are similar to gamblers, whereas lower-risk gold investors use fundamentals and analysis.
Bill Beament needs to be mindful of his duty to shareholders and not gamble with their investment. Failure will see Beament removed and Northern Star Resources in damage control.