If you plan to diversify your portfolio in light of recent events, investing in gold stocks could be a good option. Gold stocks not only follow the movements of gold prices, which tend to rise in uncertain times, but also often gain value in a rising stock market.
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Since gold prices tend to rise, gold shares could serve as a hedge for shares you own in other economic sectors. Gold shares can also be traded speculatively in the current economic environment.
Keep in mind that gold stocks can vary considerably in price and investment quality, from highly rated publicly traded stocks to lower quality penny stocks (OTC Pink). Thebest gold stocks will depend on your risk tolerance and financial goals.
Overview: Gold Stocks
Newmont Mining Corporation (NYSE:NEM) is the world’s largest gold mining company. The Greenwood Village, Colorado-based company was incorporated in 1921 after being founded in 1916 by William Boyce Thompson. The company employs 24,000 people worldwide and is the only gold mining company in the S&P 500 index.
Barrick Gold Corp. Toronto-based (NYSE:GOLD) is the world’s second-largest gold miner.In 1983, Peter Munk launched the Toronto Stock Exchange-listed firm.
Brian Hinchcliffe and Harry Dobson founded Kirkland Lake Gold (NYSE:KL) in 1994, and it has its headquarters in Toronto. The company began operations as Brimstone Gold Corporation and grew through key acquisitions, including Foxpoint Resources in Vancouver and Kirkland Lake in Ontario.
The best online brokers for gold stocks
You can buy gold shares through virtually any broker with access to major stock exchanges, and commission-free trading is offered at many online brokerages. Some of the major US brokers you might consider for trading gold stocks include E*TRADE, TD Ameritrade,Charles Schwab, or Interactive Brokers.
Characteristics to look for in a gold stock
- A strong balance sheet: As with stocks in general, a strong balance sheet with consistent earnings-per-share growth would qualify a stock for consideration. The balance sheet will also indicate the amount of cash available and the amount of outstanding debt. A miner needs cash flow to find more gold and keep the gold he has in reserves, while more cash generally indicates lower debt.
- Location of mining operations: Most investment-grade mining corporations operate numerous mines in their home country and in other countries where they own assets. Geopolitical issues may put foreign-operated mines at danger, but most mining corporations work with the governments of their host countries. Ideally, mines located abroad should be in politically stable countries to mitigate geopolitical risks.
- Strong operating margins: In the gold mining business, the better the margins, the higher the cash flow. Margins for gold miners tend to improve as the price of gold tends to rise, which further drives the share price higher.
Gold Stocks: Is Now the Time to Buy?
Gold mining has been one of the few sectors to benefit from the COVID-19 pandemic.Gold shares rose as companies adjusted to global mine closures and higher gold prices.
If gold stays above $1,500 per ounce, buying gold shares now makes sense.
Please see our other pages devoted to price actions if this is not what you were searching for.
- Stocks under $5 (assuming a price above $1)
- Stocks under $10 (assuming a price above $5)
- Stocks under $20 (assuming a price above $10)
Or check out some of our other favorites:
- You invest, by JP Morgan
- charles schwab
- TD Ameritrade
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