Gold has been considered an asset longer than many countries, including the United States, have been in existence. , pardon the pun, and has been the subject of much debate in the financial marketsPune Stock. Read on for a contemporary look at the gold stock industry, and three stocks that investors might consider researching if the idea of investing in companies that mine for gold are of interest to them.
by 15% in 2023, finishing the year at $2,078 per ounce. That was the highest close on record, but don’t read too much into that. It traded at $2,582 per ounce in February 1980 so in 44 years, the price of gold has lost 20% in total. Its strong 2023 performance is prompting a lot of interest and intrigue. Gold is closely watched by market technicians, and some have suggested that the price of gold is in range of a major long-term price breakout.
While many investors have opinions on the future price of gold, investors would be wise to take them with a grain of another commodity, salt. That’s because gold has historically attracted a very sales-driven element, with many trying to appeal to gold’s historical reputation as a “flight to safety” asset. In other words, if the entire financial system came crashing down, holding physical gold would be the purest, most lasting form of currency. That type of rhetoric is ubiquitous and thus investors need to turn inward and determine for themselves what their reasons are to consider owning gold in some form.
is long and winding. Until 1933, gold was a regular means of exchange. However, that year, in the heart of the Great Depression, gold hoarding took the supply down and many countries were forced off the gold standard, since the market became illiquid. The U.S. continued to have gold as a means of exchange through 1971, but ended the dollar-gold relationship at that time.
Some economists and investors still pine for a return to the “gold standard,” and the emergence of bitcoin and other cryptocurrencies only muddles the picture more. The question of what is “currency” to use in transactions, especially in a modern digital economy, is the subject of fierce debate.
That might prompt investors to shy away from gold as a commodity. But there is a viable alternative that is more familiar to stock investors. Gold comes from mining, and the companies that do the mining, while closely tied to the fate of gold’s price, are real businesses, and can be analyzed and traded like other stocks.
However, for investors who want to consider gold and beyond, here are three I selected that may be a good place to start research.
The brain trust at Forbes has run the numbers, conducted the research, and done the analysis to come up with some of the best places for you to make money in 2024.
Using statistical data, including fundamental ratios, valuation indicators, profitability measures, and company quality and sustainability, I selected three stocks. All US-based, as opposed to the many gold miners in Canada, Australia, South Africa and elsewhere.
My analysis favored a history of profitable operations over current price trends, as these stocks tend to trade somewhat in sync, with the higher-quality businesses having an edge, except during times where the markets are very risk-seeking. During those times, the more levered, lower-quality stocks in this and any other industry may have more explosive upside potential, as well as continuing to carry more risk of loss when the gold tide turns.
Remember also that these are both gold plays and stocks. So, a dip in the gold price is one way to suffer losses, and a drop in the stock market or even just the materials sector is another way that these stocks often decline. With those cautionary notes out of the way, here are three gold stocks for 2024.
Stock price: $36.01
Revenue per share: $13.90
Dividend yield: 4.4%
Dividend payout: Quarterly
Newmont is the world’s largest gold mining company in terms of market capitalization, about 30% higher than Barrick (see below), the next largest stock. Around since 1916 and a public company since 1925, Newmont operates in North America, South America and in Africa. It employs more than 14,000 people and has used its size and sustained success in this industry to its advantage.
Newmont’s key strategic advantages include the fact that its mines are located in politically stable regions of the world. That allows it to benefit more easily when the price of gold rises.
Stock price: $15.96
Revenue per share: $6.33
Dividend yield: 2.5%
Dividend payout: Quarterly
Barrick is an explorer, miner, producer and seller of gold, as well as copper. Its business spans North America, part of Africa and other parts of the globe. It is headquartered in Toronto, Canada.
I’d have to have a good reason to leave a gold mining company with the ticker symbol GOLD off this short list. And I didn’t find one. That’s because Barrick’s size, quality assets, strong fundamental position and growth potential make it a solid, if not spectacular competitor in this peer group.
The brain trust at Forbes has run the numbers, conducted the research, and done the analysis to come up with some of the best places for you to make money in 2024.
Stock price: $5.63
Revenue per share: $3.40
Dividend yield: 2.1%
Dividend payout: Quarterly
Kinross is the one of these three stocks that is part of the “junior” mining group, the smaller set of firms in this businessSurat Wealth Management. It is active in the U.S. and Brazil, as well as Canada, its home country, among other sites.
Kinross is coming off a strong last quarter, where it increased its production and cost efficiency, as well as maintaining its strong cash flow. In particular, its is boosted by its operations in Nevada’s Round Mountain, a mine Kinross has owned by itself since 2016, after years in which it shared it through a 50-50 partnership with Barrick.
Gold mining stocks are one of the more volatile areas of the stock market. A pair of indexes tracked through that track gold miners and smaller “junior” gold miners have declined 81% and 89%, respectively, from their peak levels at some point in their trading histories.
This is an area of high risk and high correlation to the price of gold. As is often the case in investing, there is high reward potential that goes with that risk. The better the stock market and the higher the price of gold, the better the tailwind for these stocks. And the current market for gold stocks looks moderate, rather than fundamentally or technically cheap with gold at multi-year highs.
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