Stock ownership of a gold and silver mining company traded on one of the exchanges can be one of the best returns on investment especially during a bull market in the gold sector. Even thou there is alot more risk associated to owning shares in companies, you can realize bigger returns than the rise in the price of gold. Stocks provide a greater leverage as the price of gold increases because earnings and company valuations increase.

Remember the movement in share price is not only dependent to the price of gold; there are many other factors to consider. You should also consider the company's share structure, projects and management. Doing your due diligence and researching the company is very important. Choosing the wrong company can result in big losses too. It’s the risk/reward ratio that one should consider when investing in gold mining companies.

There are 3 main groups of companies you can choose to invest with, each one having its own risk reward ratio and evaluation criteria / matrix.

1. Senior Gold Producers – are mainly interested in creating and mining large gold projects. These projects are very expensive to get started and can take many years from feasibility to production. These companies have enormous market capitalization but are probably the most stable. The valuation methods are a little easier to calculate than junior gold producers or exploration companies.