Gold has long been regarded as a haven in times of market turmoil. The first half of 2020 saw the commodity’s price crash hard and fast amid the coronavirus pandemic. However, gold not only gloriously rebounded but also hit a new all-time high of $2,075 (£1,500, Є1,742) by August 2020.
The commodity started 2021 on a high level of $1,950 (£1,416, Є1,637) but gradually declined to around $1,680 by the end of March 2021. Another rebound started in April with the gold price climbing up to around $1,745 (1,267, Є1,465), as of April 9, 2021.
What are the best gold stocks to buy in 2021 if the price continues rising? Let’s quickly recap gold’s performance and check out the best trading opportunities among gold mining stocks.
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Will the gold price rebound in 2021? A quick gold stock analysis
Investors have always used inflation as an indicator for gold stock predictions. If the cost of living goes up, the gold price usually follows suit. Inflation rates haven’t been a concern in 2020, as most economies showed low and stable inflation levels despite the global health crisis. However, Fed Chairman Jerome Powell believes that inflation rates are due for a rebound in 2021, so gold prices are likely to rebound as well.
Despite strong fundamentals, gold stocks in 2021 have been struggling to take off. Gradually moving down since August 2020, they have been out of favour among investors and traders. Often, when traders are frustrated with gold price predictions, they tend to go short on gold stocks, but recent fundamentals give a hint that an opposite strategy might create better opportunities.
Prices for gold stocks in April can be affected by the fourth quarter results, revealed by gold mining companies. Some of the best gold shares to watch, including Newmont, Franco Nevada and Kirkland Lake Gold, reported record high revenues and adjusted earnings. It means that even if the gold price is down from its August 2020 highs, gold miners are still capable of generating significant cash flow in 2021.
To build your own gold stocks list for 2021, watch a short video by our Chief market strategist David Jones, providing a deeper insight into top 4 gold mining stocks to watch in April 2021 and beyond.
What are the best gold stocks to invest in 2021?
Many people choose to invest in gold by buying shares of companies engaged in gold mining and exploration. Value investing is one of the most popular strategies which involves picking stocks that are trading for less than their intrinsic worth to then resell them at a rebound value. With this in mind, let’s have a look at some of the best gold shares that have potential to provide the best value.
1. Newmont Corporation
The Colorado-based producer of precious metals reveals a diverse portfolio which includes gold and platinum group metals. It’s not for nothing that the company is one of the biggest gold miners in the world. Newmont develops and extracts metal properties, with operations carried out majorly in North and South America.
Gold operations and projects are majorly concentrated in Nevada, Colorado, and Ontario, but also in Ghana and Australia, whilst copper, zinc, lead and silver explorations are carried out in other territories as well.
Newmont Corporation’s stocks have always positioned well on the stock market, ranked 146 among the top US companies included in the S&P 500 index. However, a 4.3% drop in February 2021, hints that it can be a good time to take a closer look at NEM stock. With a rebound in gold price, investors might have a good return on their Newmont investment in a one-year period according to Walletinvestor.
2. VanEck Vectors
One of the largest international mining funds, VanEck Vectors Gold Miners ETF is considered the nation’s first gold mining portfolio. It gives exposure to the whole gold mining area, tracking the performance of gold mining companies. It replicates the performance of the NYSE gold mining index.
VanEck Vectors ETF is a good choice for investors who want to gain exposure to the gold mining sector without the risk of putting money into one particular stock, choosing a basket of stocks instead.
Last summer, the VanEck recorded strong inflows, as gold surged to its record highs. Since then, the ETF lost almost 30% in value, currently trading at around $34.60. However, analysts from Walletinvestor believe VanEck Vectors Gold Miners ETF could be a good long-term investment, giving an average price target of $38.83 in a one-year period.
3. Franco Nevada
Although not a traditional gold mining company, Franco Nevada could be considered one of the best gold stocks to invest in 2021. Franco Nevada is a leading gold-focused royalty and stream company, which manages the most diversified portfolio of cash-flow producing assets. Besides gold, the company is interested in silver, oil and gas and platinum group metals. While Franco Nevada does not own their own gold mines, they rather invest in various gold mining operations, providing gold miners with capital in return for the possibility to buy gold at a pre-agreed purchase price.
On March 10, 2021, the company announced record annual results and dividend increase. Franco Nevada’s gained revenue of $1,020.2 million for the full year 2020, which represents a 21 per cent increase compared to 2019. They generated more than $800 million in annual operating cash flow.
Although the Franco Nevada stock price has been gradually descending since the beginning of the year, with a slight rebound in March 2021, analysts from Walletinvestor consider it a good long-term investment, predicting the price target of $161.31 in a one-year period.
4. Kirkland Lake Gold
Kirkland Lake Gold is a Canadian-based gold mining company that makes waves on the gold stocks list for 2021. It engages in gold mining and exploration majorly in Canada and Australia.
The company was founded in 1988 and was briefly operated by Brimstone Gold Corp between 1994 and 1999. Since then, the corporation diversified its exploration projects and today, Kirkland Lake Gold includes several gold mining complexes, such as Macassa in northeast Ontario and Fosterville in Victoria, Australia.
In 2020, Kirkland Lake Gold was hit by the global pandemic like all other gold stock players. Although the Kirkland stock lost almost 40 per cent since the gold’s record high in August 2020, it still might be an attractive stock to watch if the price of gold rebounds.
One good thing about last year’s economic uncertainty is the rebound of the gold stocks market. Although all the market players mentioned above are not on their highest points right now, further rise in gold price can bode well for their performance.
If you’ve been thinking about trading gold right now, you should consider doing it with contracts for difference. Don’t forget that with contracts for difference, it does not matter whether your view of a particular gold mining stock is positive or negative. You can always try to profit from any future price fluctuations, regardless of their direction by taking a long or a short position respectively. Follow the latest gold market news and track the gold live rates with Capital.com.