The Worst Way to Invest in Gold

Cinema giant AMC Entertainment made a comeback due to retail investors, but it recently made a surprise investment that is the absolute worst way you could invest in gold... [Stansberry Research Logo] Delivering World-Class Financial Research Since 1999 [DailyWealth] The Worst Way to Invest in Gold By Sean Michael Cummings, analyst, True Wealth --------------------------------------------------------------- When the pandemic first began, people went to any lengths to stay at home – as much as they could. It was safer. And the comfort of streaming entertainment was only a click away... But these trends almost killed the American movie theater. Cinema giant AMC Entertainment (AMC) saw revenue crash more than 90% in the third quarter of 2020. Viewership fell by the same amount in the following quarter. The company was facing bankruptcy... Then, a December stock offering helped send its share price through the roof. The theater chain raised $506 million from retail investors. The stock hit meme status. allowing it to raise more than a billion more dollars throughout 2021. And it all ensured the cinema would stay open for another day... Now, it seems that money has been burning a hole in AMC's pocket. The company made a surprise investment last week. And with it, the movie-theater chain has become the absolute worst way you could invest... in gold. Let me explain... --------------------------------------------------------------- Recommended Links: [Mining Legend: 'Gold could go to $10,000/oz']( Pierre Lassonde, founder of Franco-Nevada, recently laid out the case for $10,000 gold. Which is why one of the world's foremost gold experts is pounding the table on a small handful of the best, highest-upside gold stocks he says you should target today. See how you can [stake a claim in what could be the biggest bull run for gold – ever](. --------------------------------------------------------------- [The Biggest Commodity Bull Market in History?]( "Commodities will be THE trade of the coming decade," says the senior analyst behind 24 triple-digit winning recommendations. Not just because they're among the best ways to BEAT out-of-control inflation... but because they're at the beginning stages of a massive cycle... one that could hand you quadruple-digit gains if you get in now. [He details his No. 1 favorite commodity play, right here](. --------------------------------------------------------------- Last Tuesday, AMC made an apparent impulse buy. It spent $27.9 million to acquire a 22% stake in Hycroft Mining (HYMC). Hycroft is a junior gold miner holding a 70,000-acre deposit in Northern Nevada. The story may sound unlikely, and maybe even a little harebrained. But it's true. AMC is now a one-stop shop. The stock offers exposure to the movies... and now, to gold. In a broad sense, AMC was wise to buy into the trend. Frankly, it's a great time to be long gold. The metal is only about 5% off its all-time high. We can credit this rally to soaring inflation... or maybe the new era of geopolitical uncertainty. Whatever the reason, investors are fleeing to safety. At times like these, gold often soars. But whatever its business goals might be, AMC seems to be missing a crucial point... Gold miners are some of the riskiest long-term investments you can make. That might sound controversial. But it's a fact... The Philadelphia Gold and Silver Index (XAU) is the benchmark gold miners index. It includes 30 high-profile precious metals miners. In the last 35 years, this index has returned nearly 45%. Meanwhile the S&P 500 Index has soared more than 2,850. To be fair, you can make a lot of money in quality miners at the right time. But most companies aren't quality... And most times aren't right. It's a tough business. This reason is the hyper-cyclical nature of gold mines. Every mine eventually runs out of gold. When that happens, you've got to find a new one, and develop it at a huge cost. In Hycroft's case, the company fell into a major liquidity crisis. It had only $12.3 million in cash... Yet it carried $159 million in debt. That's a big part of why AMC could buy so much of Hycroft so cheaply. Now, it's worth noting that commodity tycoon Eric Sprott matched AMC's stake out of his own pocket. Maybe there's more to Hycroft than meets the eye. But the bigger question is what this means for AMC... It still seems to be a movie-theater chain. But now, it's also a mezzanine fund... Or a gold speculator? Perhaps its new mission is to rehabilitate struggling businesses. AMC's CEO Adam Aron has gone so far as to comment that Hycroft's liquidity crisis is a lot like what AMC experienced... But instead of making acquisitions, it might be a better idea for AMC to pay down its almost $11 billion debt load. Tacking a bad business onto a bad business is rarely a recipe for success. The cinema mogul's game plan is unclear. But one thing is certain... The only commodity play worse than a struggling junior miner... is the entertainment company that bought one on a whim. Good investing, Sean Michael Cummings P.S. When gold booms, the right gold stocks can absolutely soar. But you need to make sure you avoid the duds – and invest in the best companies in the business. Our colleague John Doody has an incredible track record in the industry. He's behind the only gold strategy we've seen that has delivered audited gains of 1,033% from 2001 to 2021... drastically outperforming gold's 560% and the S&P 500's 443%. And right now, he's sharing the best way to profit as gold breaks out... [Check out the details here](. Further Reading Despite AMC's strange impulse buy, one thing is true... The conditions are right for investing in gold. John Doody explains the forces that are lining up in gold's favor today right here: [The Two Key Factors That Will Drive Gold Higher](. "Right now, gold is coming off a new 52-week high," Chris Igou says. History tells us that's an important signal... one that could lead to more upside over the next year. Read more here: [Gold's Rally Is Just Beginning](. INSIDE TODAY'S DailyWealth Premium Avoid the worst way to invest by doing this instead... It's easy to make a mistake in the stock market, whether it's buying at the top or selling at the bottom. But investors must grapple with another issue too... [Click here to get immediate access](. Market Notes HIGHS AND LOWS NEW HIGHS OF NOTE LAST WEEK AbbVie (ABBV)... [pharmaceuticals]( Bristol-Myers Squibb (BMY)... pharmaceuticals Eli Lilly (LLY)... 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