If you think of physical gold and gold mining shares as being ‘one and the same’, I believe you ought to reconsider that position.  In fact, I do not believe you should think about ‘gold mining shares’ as a single investment/trading category.  First, physical gold and gold mining shares are for me two entirely different things.   Second, I believe it necessary to think of gold exploration companies not as ‘gold mining companies’ – they don’t mine anything, they work to ‘find gold reserves and resources, and while a few of the exploration companies might ultimately become gold producers they are ‘explorers’ and not ‘mining companies’ until they do.  Gold Mining Companies are companies that actually mine and produce physical gold.

That said, first, I believe physical gold to be a 'safe haven' 'purchasing power protectorate' to be held to protect against economic uncertainty and investment markets volatility.  Second, I see gold exploration company shares as highly speculative investments where, if an investor ‘gets it right’ and ‘gets lucky’ can result in large  investment returns – where risk and reward is absolutely company fact specific, and where the physical gold price is only one of multiple inputs in that risk/reward equation.  Third, I see gold mining company shares as having a third and quite distinct risk profile, where they can be valued (priced) on conventional discounted cash flow metrics but where they can be clearly distinguished from conventional (say, consumer products) businesses in two ways (1) they have no control over the price their product (gold and other metals) fetches as these prices are dictated by world markets, and (2) their existing mineable resources have a finite life that diminishes as those resources are depleted by extraction and processing.

Both gold exploration companies and gold mining (producing) companies are investments where business risks go far beyond the price of physical gold.  Each individually needs to be carefully researched and analyzed from a value (price) perspective - with each exploration and mining company's shares (and underlying business) being assessed and valued on the 'fact specific factors' related to each individual company at any given point in time.

For me to lump physical gold, gold exploration companies and gold mining (producing) companies together makes absolutely no sense.  As I see it, to lump them together and pick one over the other two as the ‘better investment’ is akin to saying you should buy a bathing suit but not a sweater or underwear when all three are categorized as 'clothes' but where each garment serves an entirely different purpose one from the other.

I believe all three (physical gold, gold exploration companies, and gold mining companies) may have a place in an individual investor's investment mix – depending of course on the investor’s age, risk tolerance, quantum of funds invested, etc.