Buying gold: ETFs may own companies or the metal

— -- Q: Why don't shares of gold stocks and gold mutual funds always rise along with the price of gold?

A: The price of gold isn't always reflected in the price of gold stocks.

Remember, that gold companies aren't the same as bars of gold. They have people, expenses, inventory, capital expenditures and competition. All these can cause a gold company's stock to diverge from gold prices.

And that's what happened last year. In 2008, the price of gold jumped 5.8%, but gold stocks didn't fare as well. The Market Vectors Gold Miners exchange-traded fund (GDX), which tracks gold companies' shares, fell 26.1%. Even shares of large individual gold companies, such as Barrick Gold abx, fared worse than the price of gold, falling 8.7%.

Barrick, for instance, does benefit from higher gold prices and higher demand for gold. But there are other considerations. For instance, Standard & Poor's analyst Leo Larkin writes in a report that the company's profit margins could shrink due to lower copper prices and other increased corporate costs.

It's a reminder that if you want to invest in gold prices, you need to either buy the metal itself or invest in an ETF linked to the commodity. The streetTracks Gold Trust ETF gld for instance tracks the price of gold bullion as goes the iShares Comex Gold Trust iau.

Matt Krantz is a financial markets reporter at USA TODAY and author of Investing Online for Dummies. He answers a different reader question every weekday in his Ask Matt column at money.usatoday.com. To submit a question, e-mail Matt at mkrantz@usatoday.com. Click here to see previous Ask Matt columns.