The fact that the price of gold hasn’t rallied with so much money being added to the economy is one of the more puzzling developments in financial markets this year. This shiny yellow metal is a commodity that is typically considered to be a smart way to hedge against inflation and has seen its prices decline and stagnate for the majority of the year even with rising Consumer Price Index values and unprecedented fiscal stimulus. All of this adds up to a scenario where gold could be a sleeping giant that is just waiting to rally, which is why investors might want to look into adding exposure to gold stocks in the coming weeks.
1. Barrick Gold
This is one of the world’s largest gold companies based on production and reserves, which means that the company’s results and stock price are directly correlated to trends in gold production and pricing. That’s why it’s a very strong option to consider if you think that gold prices are headed higher in the coming months, especially since Barrick Gold (NYSE:GOLD) has such a big portfolio of gold-producing assets. That includes mining operations and projects in 15 countries like Argentina, Australia, Canada, Chile, Cote d’Ivoire, Peru, the U.S., and more.
The company operates 6 “tier one” mines, which are classified as mines with a remaining life of 10 years, annual production of at least 500,000 ounces of gold, and cash cost per ounce in the bottom half of the industry range. Barrick Gold also recently announced that it is on track to meet its Q1 guidance and has produced 1.1 million ounces of gold in Q1 2021. The stock offers a 1.58% dividend yield and has one of the better risk-to-reward profiles in the gold miners at this time given that the stock price has declined over 28% from its 2020 highs.
Buying the actual commodity is one way to go about gaining gold exposure, but gold miner stocks are also a smart option because you get to own actual companies with growth opportunities and dividends. Let’s take a look at 3 gold stocks that could regain their luster soon.
2. Newmont Corporation
Let’s face it, as long as we are facing widespread economic uncertainty and the threat of inflation, gold will be in high demand. That’s a big reason why Newmont (NYSE:NEM) is a great stock to consider buying at this time. It’s a mining company that is the world’s largest gold producer with assets in the U.S., Canada, Dominican Republic, Peru, Argentina, Chile, and more. Newmont is also focused on the production of and exploration for copper, silver, zinc, and lead, which means that you get exposure to several commodities that could also be strong performers in the future.
Newmont has made some strategic moves including the acquisition of Goldcorp and a joint venture with Barrick Gold that could deliver hundreds of millions of dollars in annual synergies, which is another quality that makes this a top-tier gold stock to add. The company reported a record $4.0 billion of cash from continuing operations and $3.6 billion of Free Cash Flow in 2020 and offers investors a 3.29% dividend yield at this time. Newmont Corporation reports its Q1 2021 earnings on Apr. 29 which will provide investors an opportunity to see if gold production is picking up in some of the countries where operations were halted last year due to the pandemic.
3. VanEck Vectors Gold Miners ETF
Another great option for investors that are interested in exposure to gold at this time is the VanEck Vectors Gold Miners ETF (NYSE:GDX) This ETF is a strong choice because it provides exposure to the biggest gold miner stocks including the aforementioned Barrick Gold and Newmont Corporation along with some mid-tier and junior gold mining companies. That way, you can minimize your company-specific risk and gain diversified exposure to a basket of stocks in the sector instead.
Keep in mind that the smaller gold miners have been known to outperform during periods of rising gold prices, which means that this ETF could deliver strong gains if the precious metal starts to rally. VanEck Vectors Gold Miners ETF is currently breaking out of a big downtrend and is close to retaking the 200-day moving average, which would be a very intriguing entry point for long-term investors. It also pays a 0.59% dividend yield and is up over 16% since March, which tells us that money is starting to flow back into this ETF.