With markets across the world in turmoil due to escalating geopolitical tensions, investors are flocking to gold stocks as a safe haven asset. Due to uncertainty arising from Trump’s trade war with China and the UK’s departure from the EU, gold looks as good an investment as ever as speculators seek shelter from fluctuating markets.
Despite the market for the precious metal hitting a little bit of a stumbling block recently, with prices hovering around the $1,500 per ounce mark, many analysts are still upbeat. Just this week analysts at Bank of Montreal increased their forecast for gold through to 2022, the second time the bank has raised its forecast in recent months. This could be boosted by financial institutions cutting interest rates, with the ECB just announcing a series of quantitative easing measures leading to a rally in gold. The Fed is up next and is likely to have a similar effect on the precious metal market.
So, let’s take a look at which stocks could benefit the most.
Eldorado Gold Corporation (TSX:ELD) (NYSE:EGO) is a Vancouver-based gold mining company with assets in Canada, Turkey, Romania, Brazil, and Serbia. In its Q2 report last month, EGO reported steady gold production of 91,803 ounces with 174,780 ounces produced year-to-date, which is in line with its annual guidance. This output also includes over 5,000 ounces mined from its recently commenced operations in Lamaque.
EGO stock is currently valued at $8.67 per share and is up nearly 200% in the year to date. With a pretty strong balance sheet, a broad portfolio of assets offering steady returns, and a share price going nowhere but upwards as of late, EGO stock looks like a really promising gold stock to hedge your assets.
Centerra Gold Inc (TSX:CG) (OTCPK:CAGDF) is another Canadian gold miner that has seen its share value rocket over the course of the year. With two flagship operations in Mount Milligan and the Kumtor, located in Canada and the Kyrgyz Republic, Centerra produced nearly 200,000 ounces of gold during Q2 and modestly increased its guidance for the year from 705,000 to 750,000 ounces. The company is also expected to begin mining at a location in Turkey in January 2020, which could provide another boost to the books.
CG stock is currently valued at $8.70, which looks like a bargain considering it has gained nearly 85% in the year to date. Interestingly, a large portion of shares was bought by insiders in the company, which could indicate their confidence in the internal operations of the firm. An even bigger indicator of this stock’s performance is the total shareholder return of 106%, which shows the benefits of dividends to CG’s shareholders.
Detour Gold Corporation (TSX:DGC) (OTCPK:DRGDF) is a mining firm that focuses its operations on its namesake Detour Lake mine, which is one of Canada’s premier gold mine assets. While the company has posted a series of disappointing results, including a decline of 3% in gold production in Q2, there are still some positives for this gold stock. With a new CEO and rejuvenated board at the helm, DGC is looking towards a range of business improvements, such as deferring non-essential expenditure and increased mining fleet productivity.
The really important thing for investors is DCG’s healthy balance sheet. The company has $203 million USD in cash on hand, and its debt ratio is just 0.099, which is very low. DCG had made gains as high as 114% in places this year, and could make for a very good addition to your portfolio should the company begin to take full advantage of its Detour Lake mine.
Gold stocks are offering some really exciting possibilities now and whether you’re looking for big returns from small- to mid-cap firms, or you’re seeking shelter from the possibility of a recession, these picks could be just what you need to pad out your portfolio.
While you’re here, why not check out our penny stocks to watch in September!
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