Gold has long been hailed as a safe fallback for investors — especially those looking to diversify and hedge against inflation. But the companies responsible for this flashy commodity aren’t immune to risk and must be mindful of economic and geopolitical fluctuations in the countries they operate in.
Gold stocks are stocks from companies involved in the mining and production of gold. The category is heavily dominated by mining companies, but investors can also back gold streaming and royalty companies: companies that fund mining efforts in exchange for the opportunity to buy gold at a set price in the future.
Gold stocks are one way for investors to gain access to this historically significant commodity, but there are also other ways to invest, including gold exchange-traded funds (ETFs) and purchasing physical bullion and coins.
Why invest in gold stocks?
Gold stocks can help diversify and stabilize your portfolio while simultaneously representing the cultural and historical significance of gold. Simply put: gold is valuable. It was valuable thousands of years ago, and it’s valuable now. It predates modern currency and its price tends to move independently of the stock market, strengthening its diversifying properties.
Historically, the price of gold has risen in tandem with the cost of living. This makes it a powerful hedge against inflation. It also tends to perform well in a down market as people fall back on the security of gold and cash in times of economic uncertainty. For an example of this phenomenon in action, look no further than the 1930s — when the market crashed, the purchasing power of gold skyrocketed.
With its ability to weather highs and lows and its inverse relationship to stocks, gold makes for a solid portfolio stabilizer.
Gold stocks
Since gold mining is an international enterprise, be prepared to invest in companies headquartered outside the US:
Select a company to learn more about what they do and how their stock performs, including market capitalization, the price-to-earnings (P/E) ratio, price/earnings-to-growth (PEG) ratio and dividend yield. While this list includes a selection of the most well-known and popular stocks, it doesn't include every stock available.
Company summary
Franco-Nevada Corporation operates as a gold-focused royalty and stream company in the United States, Canada, Latin America, Australia, Europe, and Africa, and internationally. It operates through two segment, Mining and Energy. The company manages its portfolio with a focus on precious metals, such as gold, silver, and platinum group metals; and energy comprising oil, gas, and natural gas liquids. The company was incorporated in 2007 and is headquartered in Toronto, Canada.
Freeport-McMoRan Inc. engages in the mining of mineral properties in North America, South America, and Indonesia. The company primarily explores for copper, gold, molybdenum, silver, and other metals, as well as oil and gas. Its assets include the Grasberg minerals district in Indonesia; Morenci, Bagdad, Safford, Sierrita, and Miami in Arizona; Tyrone and Chino in New Mexico; and Henderson and Climax in Colorado, North America, as well as Cerro Verde in Peru and El Abra in Chile. The company also operates a portfolio of oil and gas properties primarily located in offshore California and the Gulf of Mexico. As of December 31, 2020, it operated approximately 165 wells. The company was formerly known as Freeport-McMoRan Copper & Gold Inc. and changed its name to Freeport-McMoRan Inc. in July 2014. Freeport-McMoRan Inc. was incorporated in 1987 and is headquartered in Phoenix, Arizona.
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, and Ghana. As of December 31, 2020, it had proven and probable gold reserves of 94.2 million ounces and land position of 58,900 square kilometers. The company was founded in 1916 and is headquartered in Denver, Colorado.
Sibanye Stillwater Limited operates as a precious metals mining company in South Africa, the United States, Zimbabwe, Canada, and Argentina. The company produces gold; platinum group metals (PGMs), including palladium, platinum, and rhodium projects; and by-products, such as iridium, ruthenium, nickel, copper, and chrome. It owns the East Boulder and Stillwater mines located in Montana, the United States; and Columbus metallurgical complex, which smelts the material mined to produce PGM-rich filter cake, as well as conducts PGM recycling activities. The company is also involved in the Kroondal, Rustenburg, Marikana, and Platinum Mile operations situated in South Africa; Mimosa located on the southern portion of the Great Dyke in Zimbabwe; the Driefontein, Kloof, and Cooke surface operations located on the West Rand of the Witwatersrand Basin; and the Beatrix situated in the southern Free State. In addition, it owns an interest in surface tailings retreatment facilities; the Marathon PGM project in Ontario, Canada; the Altar and Rio Grande copper gold projects in the Andes in north-west Argentina; the Hoedspruit, Zondernaam, and Vygenhoek PGM projects in South Africa; and the Burnstone and southern Free State gold projects in South Africa. Sibanye Gold Limited was incorporated in 2002 and is headquartered in Weltevreden Park, South Africa.
Historical performance
Stock information
Market capitalization: $14113673216
P/E ratio: 3.7739
Dividend yield: 0.0523%
Company summary
Agnico Eagle Mines Limited engages in the exploration, development, and production of mineral properties in Canada, Mexico, and Finland. The company operates through Northern Business and Southern Business segments. It primarily produces and sells gold deposit, as well as explores for silver, zinc, and copper deposits. The company's flagship property is the LaRonde mine located in the Abitibi region of northwestern Quebec, Canada. As of December 31, 2019, its LaRonde mine had a mineral reserve of approximately 2.9 million ounces of gold. The company is also involved in exploration activities in Europe, Latin America, and the United States. Agnico Eagle Mines Limited was founded in 1953 and is headquartered in Toronto, Canada.
Historical performance
Stock information
Market capitalization: $17534701568
P/E ratio: 34.3191
PEG ratio: 1.89
Dividend yield: 0.0136%
Company summary
Barrick Gold Corporation engages in the exploration, mine development, production, and sale of gold and copper properties. It has ownership interests in producing gold mines that are located in Argentina, Canada, Côte d'Ivoire, the Democratic Republic of Congo, the Dominican Republic, Mali, Papua New Guinea, Tanzania, and the United States. The company also has ownership interests in producing copper mines located in Chile, Saudi Arabia, and Zambia; and various other projects located throughout the Americas. It has a strategic alliance agreement with Reunion Gold Corporation. Barrick Gold Corporation was founded in 1983 and is headquartered in Toronto, Canada.
Historical performance
Stock information
Market capitalization: $43067760640
P/E ratio: 18.531
PEG ratio: -2.93
Dividend yield: 0.0132%
Company summary
Eldorado Gold Corporation and its subsidiaries engage in the exploration, discovery, acquisition, financing, development, production, sale, and reclamation of mineral products, primarily in Turkey, Canada, Greece, Brazil, and Romania. The company primarily produces gold, as well as silver, lead, zinc, and iron ore. It operates five mines: Kisladag and Efemcukuru located in western Turkey, Lamaque in Canada, and Olympias and Stratoni located in northern Greece. The company was formerly known as Eldorado Corporation Ltd. and changed its name to Eldorado Gold Corporation in April 1996. Eldorado Gold Corporation was founded in 1992 and is headquartered in Vancouver, Canada.
Sandstorm Gold Ltd. operates as a gold royalty company. It focuses on acquiring gold and other metal purchase agreements and royalties from companies that have advanced stage development projects or operating mines. The company offers upfront payments for companies to acquire a gold stream or royalty and receives the right to purchase a percentage of a mine's production for the life of the mine at a fixed price per unit or at a fixed percentage of the spot price. It has a portfolio of 201 streams and royalties. The company has operations in Canada, Mexico, the United States, Mongolia, Burkina Faso, Ecuador, South Africa, Ghana, Botswana, Cote D'Ivoire, Argentina, Brazil, Chile, Peru, Paraguay, Egypt, Ethiopia, Guyana, French Guiana, Turkey, Sweden, and Australia. The company was formerly known as Sandstorm Resources Ltd. and changed its name to Sandstorm Gold Ltd. in February 2011. Sandstorm Gold Ltd. was incorporated in 2007 and is headquartered in Vancouver, Canada.
Historical performance
Stock information
Market capitalization: $1581549312
P/E ratio: 115.7143
PEG ratio: 3.92
Dividend yield: 0%
What ETFs track the gold category?
Stocks aren’t the only option for investors interested in gold — there are numerous ETFs that track the gold category. These ETFs follow numerous sub-categories of the industry, including mining companies, exploration companies and the asset itself:
Global X Gold Explorers ETF (GOEX)
iShares Gold Trust (IAU)
iShares MSCI Global Gold Miners ETF (RING)
SPDR Gold Trust (GLD)
Sprott Gold Miners ETF (SGDM)
Sprott Junior Gold Miners ETF (SGDJ)
VanEck Vectors Gold Miners ETF (GDX)
VanEck Vectors Junior Gold Miners ETF (GDXJ)
Outside of stocks and ETFs, there’s also the option of purchasing physical gold, including coins, ingots and bars. If you plan to buy physical gold, make sure you have a secure place to store it before you invest.
Risks of investing in gold
Most gold stocks are vulnerable to the same risks as other mining stocks, namely: economic shifts, geopolitical changes and natural disasters.
Where a mine is located factors heavily into its potential profitability, with many mining companies managing international operations. The political climate of the country in which a gold mine is located can affect material prices and businesses processes.
Gold mining companies also need to contend with Mother Nature. Natural disasters, while uncommon, may sideline mine operations for months, depending on the extent of the damage.
Compare trading platforms
To buy gold stocks, you’ll need a brokerage account. Narrow down your options by comparing features and fees.
*Signup bonus information updated weekly.
Disclaimer: The value of any investment can go up or down depending on news, trends and market conditions. We are not investment advisers, so do your own due diligence to understand the risks before you invest.
Bottom line
No investment is free from risk, and gold stocks are no exception. Before you buy in, weigh the potential benefits against the risks to determine whether gold stocks are a practical addition to your portfolio.
Compare brokerage account features and fees to find the trading platform best suited to your investment goals and budget.
Frequently asked questions
No. Physical gold is sold by precious metals dealers and banks.
XAU.
Yes. Some that do include Agnico Eagle Mines, Barrick Gold and Franco-Nevada.
Shannon Terrell is a writer for Finder who studied communications and English literature at the University of Toronto. On any given day, you can find her researching everything from equine financing and business loans to student debt refinancing and how to start a trust. She loves hot coffee, the smell of fresh books and discovering new ways to save her pennies.
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