Even its biggest critics can't deny that it's been a great year to own gold. More accurately, gold has had a good decade, but it hasn't started outperforming stocks until recently. As of this writing, gold is up about 33% in 2024 putting the spot price of gold around $2,730. That's just a little below its all-time high.
One of the primary reasons you'll hear for owning gold is its role as a safe haven asset. That means that gold holds its value even as the purchasing power of every dollar you own goes down. And every time you go to the grocery store or pay your insurance bills, you're reminded that your dollars are buying you less than they were just a few years ago.
But there could be a more urgent reason to consider owning gold, not just now but for years to come. Central bankers throughout the world are buying up as much gold as they can. Simple supply and demand dynamics suggest that gold could easily hit a high of $3,000 or even higher in short order.
That means now may be a good time to get into gold. A common way to own gold is to buy gold bars or coins. This can have liquidity issues, and you'll likely have to take a slight loss from the spot price when you sell. A different way to invest in gold is through gold stocks. In this special presentation, we're looking at seven stocks you can buy as a hedge against financial uncertainty.
Quick Links
- Barrick Gold
- Newmont Gold
- Kinross Gold
- Freeport-McMoRan
- Franco-Nevada
- SPDR Gold Shares ETF
- VanEck Gold Miners ETF
#1 - Barrick Gold (NYSE:GOLD)
Barrick Gold Corp. (NYSE: GOLD) is one of the world’s largest gold miners, with operations on four continents. The company’s flagship mine is the Cortez Gold Mine in Nevada, which has been in operation for over 50 years.
One caveat about investing in gold miners is that gold mining companies increase production when gold’s value increases. Much like oil companies, gold miners, such as Barrick Gold have to balance maximizing current mining operations with strategic expansion projects that can fuel future growth.
GOLD stock is up 14.9% in 2024. That's nice, but it’s not 33%. And it’s bucking the trend that happens with gold stocks. That is, when gold is up, mining stocks are usually up more. However, investors can get a dividend that currently pays 1.97%. And although the payout can vary, Barrick has managed to increase its dividend at an annualized growth rate of around 8.8% for the last three years.
About Barrick Gold
Barrick Gold Corporation is a sector-leading gold and copper producer. Its shares trade on the New York Stock Exchange under the symbol GOLD and on the Toronto Stock Exchange under the symbol ABX.
In January 2019 Barrick merged with Randgold Resources and in July that year it combined its gold mines in Nevada, USA, with those of Newmont Corporation in a joint venture, Nevada Gold Mines, which is majority-owned and operated by Barrick.
Read More - Current Price
- $19.59
- Consensus Rating
- Moderate Buy
- Ratings Breakdown
- 8 Buy Ratings, 2 Hold Ratings, 0 Sell Ratings.
- Consensus Price Target
- $23.60 (20.5% Upside)
#2 - Newmont Gold (NYSE:NEM)
Newmont Corp. (NYSE: NEM) is another of the world’s largest gold miners. NEM stock has been one of the best-performing mining stocks in 2024, up 30%. But that comes with the pressure of expectations. And when the company delivered a slight miss in its quarterly earnings on October 24, 2024, the stock had a sharp, swift drop of over 14%.
But this may turn out to be an overreaction to a report that wasn’t really that bad. Yes, Newmont missed earnings per share expectations by five cents. But the 81 cents per share was still more than double its EPS in the same quarter in 2023. Plus, the company’s free cash flow (FCF) for the quarter came in at $760 million, well above estimates for $584 million.
The company also announced a $2 billion expansion of its share buyback program. This is in addition to the company’s previously announced $1 billion plan, under which the company has already repurchased $750 million shares to date.
About Newmont
Newmont Corporation engages in the production and exploration of gold. It also explores for copper, silver, zinc, and lead. The company has operations and/or assets in the United States, Canada, Mexico, Dominican Republic, Peru, Suriname, Argentina, Chile, Australia, Papua New Guinea, Ecuador, Fiji, and Ghana.
Read More - Current Price
- $48.42
- Consensus Rating
- Moderate Buy
- Ratings Breakdown
- 12 Buy Ratings, 5 Hold Ratings, 0 Sell Ratings.
- Consensus Price Target
- $54.85 (13.3% Upside)
#3 - Kinross Gold (NYSE:KGC)
With a $13.2 billion market cap, Kinross Gold Corp. (NYSE: KGC) is just barely considered a large-cap mining stock. However, the Canadian-based company has been one of the best-performing gold mining stocks in 2024, with stock price growth of approximately 77%.
This is an extension of the company’s performance in 2023 when it delivered record production and leading margins at its three key products. The company has strengthened its balance sheet by paying down debt. This is increasing the company’s cash flow which it can devote to new opportunities to fuel even more growth, including its expansion into West Africa, in the coming years.
The Kinross Gold analyst forecasts on MarketBeat show a consensus price target of $9.50 which suggests the stock could be overvalued. However, on October 24, 2024, Jefferies Financial Group raised its price target from $10 to $11. And with the company reporting earnings in early November, analysts may start to bid the stock higher.
About Kinross Gold
Kinross Gold Corporation, together with its subsidiaries, engages in the acquisition, exploration, and development of gold properties principally in the United States, Brazil, Chile, Canada, and Mauritania. The company operates the Fort Knox mine and the Manh Choh project in Alaska, as well as the Round Mountain and the Bald Mountain mines in Nevada, the United States; the Paracatu mine in Brazil; the La Coipa and the Lobo-Marte project in Chile; the Tasiast mine in Mauritania; and the Great Bear project in Canada.
Read More - Current Price
- $10.53
- Consensus Rating
- Moderate Buy
- Ratings Breakdown
- 3 Buy Ratings, 2 Hold Ratings, 0 Sell Ratings.
- Consensus Price Target
- $9.50 (9.8% Downside)
#4 - Freeport-McMoRan (NYSE:FCX)
Freeport-McMoRan Inc. (NYSE: FCX) is one of the largest miners by market cap. The company’s stock is up about 10% in 2024, but the market is not impressed by the company’s October earnings report which included tepid forward guidance.
However, in addition to gold, Freeport-McMoRan is one of the world’s leading copper miners. This diverse portfolio may, in fact, be the better reason to own FCX stock. The world will need an abundance of copper to match the demands of an economy that is becoming increasingly electrified.
In the short term, copper prices are likely to remain under pressure which could signal weakness in the economy. And Freeport is reporting steady, but not spectacular gold production. However, analysts are starting to bid the FCX stock price higher. The consensus estimate of $54 is a 15% increase from the stock’s closing price on October 24, 2024.
About Freeport-McMoRan
Freeport-McMoRan Inc engages in the mining of mineral properties in North America, South America, and Indonesia. It primarily explores for copper, gold, molybdenum, silver, and other metals. The company's assets include the Grasberg minerals district in Indonesia; Morenci, Bagdad, Safford, Sierrita, and Miami in Arizona; Chino and Tyrone in New Mexico; and Henderson and Climax in Colorado, North America, as well as Cerro Verde in Peru and El Abra in Chile.
Read More - Current Price
- $46.60
- Consensus Rating
- Moderate Buy
- Ratings Breakdown
- 9 Buy Ratings, 5 Hold Ratings, 0 Sell Ratings.
- Consensus Price Target
- $54.00 (15.9% Upside)
#5 - Franco-Nevada (NYSE:FNV)
Franco-Nevada Corp. (NYSE: FNV) is a different way to invest in mining stocks. That is, instead of investing directly into a miner, you’re investing in a company that invests in mining companies. The Canadian-based company has a diversified portfolio of mining stocks. However, in 2024, about 75% of the company’s revenue is coming from its interest in gold and precious metal miners.
The benefit to this approach is that the company doesn’t have the capital and operating costs that miners endure. And the company still benefits when these companies' complete expansion and exploration projects. The company has used this cash flow to keep its balance sheet free of debt which allows it to invest in more growth opportunities.
FNV stock is up 21% in 2024, and analysts have a price target of $152 on the stock, which suggests there could be a 12.4% upside for investors. The company also has a growing dividend with a yield of 1.04%.
About Franco-Nevada
Franco-Nevada Corporation operates as a gold-focused royalty and streaming company in South America, Central America, Mexico, the United States, Canada, and internationally. It operates through Mining and Energy segments. The company manages its portfolio with a focus on precious metals, such as gold, silver, and platinum group metals; and engages in the sale of crude oil, natural gas, and natural gas liquids through a third-party marketing agent.
Read More - Current Price
- $135.65
- Consensus Rating
- Moderate Buy
- Ratings Breakdown
- 5 Buy Ratings, 4 Hold Ratings, 0 Sell Ratings.
- Consensus Price Target
- $152.75 (12.6% Upside)
#6 - SPDR Gold Shares ETF (NYSEARCA:GLD)
If buying physical gold isn’t your thing, but mining stocks also lack appeal, the SPDR Gold Shares ETF (NYSEARCA: GLD) may offer a nice compromise. Two concerns about holding physical gold are the need to store and insure it. The GLD ETF holds physical gold bullion and each share of the company represents a fractional interest in gold assets.
The fund says it’s the first U.S.-traded gold ETF and the first one listed in the U.S. to be backed by a physical asset. Its objective is simply to mirror the performance of the underlying metal. As of October 2024, the GLD ETF is up 32%, which is on par with gold’s performance this year.
Of course, when gold is underperforming so will the stock, which means the fund carries a level of risk that is not for every investor. But the fund allows investors to manage that risk with the ability to buy on margin, through using limit or stop order, or even to short sell their shares.
About SPDR Gold Shares
SPDR Gold Trust (the Trust) is an investment trust. The investment objective of the Trust is for the Shares to reflect the performance of the price of gold bullion, less the Trust's expenses. The Trust's business activity is the investment of gold. The Trust creates and redeems Shares from time to time, but in one or more Baskets (a Basket equals a block of 100,000 Shares).
Read More - Current Price
- $253.32
- Consensus Rating
- N/A
- Ratings Breakdown
- 0 Buy Ratings, 0 Hold Ratings, 0 Sell Ratings.
- Consensus Price Target
- N/A
#7 - VanEck Gold Miners ETF (NYSEARCA:GDX)
The VanEck Gold Miners ETF (NYSEARCA: GDX) is an ideal way for investors to get exposure to gold mining stocks without having to choose a particular company or two.
This is one of the largest gold ETFs, with about $16.5 billion of assets under management as of October 2024. The stock holds the stock of 60 gold mining companies, including four of the five mining stocks listed above.
The top five holdings in the fund make up nearly 45% of the fund’s assets. Since these are among the top mining stocks, when the big players are doing well, the fund does well. Of course, the opposite is true as well, which is why you may be better off investing in individual mining stocks.
The GDX fund is up about 36% in 2024. And in addition to getting exposure to some of the world’s top gold mining stocks, you get an attractive expense ratio of 0.51%.
About VanEck Gold Miners ETF
The Fund seeks to match as closely as possible the price and yield performance of the AMEX Gold Miners Index. The Fund, utilizing a passive or indexing investment approach, attempts to approximate the investment performance of the Index by investing in a portfolio of stocks that generally replicate the Index.
- Current Price
- $41.56
- Consensus Rating
- Moderate Buy
- Ratings Breakdown
- 3 Buy Ratings, 9 Hold Ratings, 0 Sell Ratings.
- Consensus Price Target
- $44.66 (7.5% Upside)
Even with gold's stellar performance in 2024, many investors will view gold as the broken clock. That is, just as a broken clock tells the correct time twice a day, if you own gold, you'll get a good bounce now and again. But the metal tends to go through long periods of underperforming the market.
Still, it all depends on where you stick the goalposts. Since September 2015, the spot price of gold is up about 161%. That's underperformed the S&P 500, which is up about 202% over the same period. A 25% increase is not insignificant, but it also shows that gold is more than holding its own as an asset class, particularly since 2020.
As this presentation shows, the reasons for owning gold today have never been clearer. But for many investors, that may not be enough reason to get involved, particularly when there's concern that they could be buying at the top.
However, if you view gold as prudent insurance against runaway government spending, a devalued currency, and the possibility of a resurgence in inflation, there's never a bad time to allocate a small percentage of your portfolio to gold and gold stocks.
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