Yesterday’s email sparked a lot of feedback from our readers.
The markets continue to sit on the fence not sure if they will explode higher, or take the nosedive long expected. FOMO is winning it appears yet the smart money is headed towards safety.
Gold has been on a tear as overall business sentiment cools.
Over the past few weeks, gold has run and there could very well be more where that came from… The market’s work in cycles, therefore, it seems it is time for GOLD and SILVER to shine.
Here are three gold stocks you should look to add to your portfolio
AngloGold Ashanti (AU)
- Market Cap: $5.51 billion
- 52-week Performance: 47.51%
The third-largest gold mining company in the world in terms of production, AngloGold Ashanti is a South African company with operations in nearly a dozen countries. In 2004, the company as it currently stands was formed when AngloGold Limited and Ashanti Goldfields Company Limited merged. In 2017, the company produced about 3.8 million ounces of gold.
Heading into the final few months of 2018, AngloGold Ashanti touted impressive figures. The company’s all-in sustaining costs (AISC) improved 14% year-over-year for Q3 2018, with full-year production figures estimated to be at the top end of guidance. Further, AngloGold Ashanti strengthened its position relative to other companies in its industry by continuing to stand out for its safety practices.
AU stock has plateaued somewhat during the month of January, but it could be poised for bigger gains following the release of overall 2018 figures in mid-February.
Barrick Gold (GOLD)
The precious metals mining companies sector has a reputation for volatility, so you should never put all of your eggs in one basket. Instead, diversify your exposure to gold stocks. Part of that strategy involves going with the big guns, and there’s no one bigger than Barrick Gold (NYSE:GOLD).
With a market capitalization just under $28 billion, GOLD stock is this sector’s flagship organization. I don’t see that changing anytime soon. Barrick operates mining projects in several resource-rich regions, including North and South America, Africa, and Australia.
Plus, gold prices are rising and that trend will likely sustain itself. This tailwind is arriving at the perfect time for GOLD stock. In its first-quarter earnings report, Barrick generated $2.1 billion in revenue, up 17% from the year-ago quarter. Q1 also saw the return of positive earnings.
The other big part of the bullish case for small-cap stocks is that as the price of gold rallies the larger companies are more likely to gobble up the smaller ones.
To some extent, all mining companies are worth the value of the gold in the ground that they own. The problem is that as they mine that metal they need to replenish it or risk having no resources left.
Newmont is expected to produce up to seven million ounces of gold a year over the next few years versus Harmony, which this year will likely have an output of slightly less than 1.5 million. Or put another way, just to keep its resource level static, Newmont must add around seven million ounces a year going forward, whereas Harmony only needs to find another 1.5 million.
Smaller companies may be able to prospect for new ore deposits but larger ones will tend to have a hard time discovering large enough deposits to make a difference. Hence the larger companies will likely decide to buy the smaller ones so bidding up stock prices of the smaller ones.
“There will be numerous stocks in the junior gold miner fund that will be bought by big companies,” says Coxe.