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The NYSE Arca Gold Miners Index, a regulated index tracking the performance of highly capitalised companies in the gold mining industry, indicated that gold stocks soared approximately 19.4% as of March 2023.
Some investors might think gold stocks have outlived their usefulness. However, the statistics above show that gold mining equities still offer significant upside potential.
Say you’re a newbie investor who wants to trade the gold stock market. In that case, you might wonder whether the precious metal is listed in prominent stock markets.
This article explores how, why, and where to invest in gold stocks to give you an idea of what it takes to profit from gold stock trading.
Is Gold Listed on the Stock Market?
Yes. You can acquire shares in companies that mine, refine, and trade gold. Some larger mining companies listed on the London Stock Exchange (LSE) include the BHP (Broken Hill Proprietary Company Limited) Group, Glencore, and Rio Tinto.
Meanwhile, you can also purchase gold and commodity funds.
These funds are either ‘actively’ managed — where a manager selects holdings according to a particular investment policy — or adopt a ‘passive’ approach using portfolios designed to track a particular stock market or commodity index.
For example, SPDR Gold Shares (GLD) is one of the oldest gold ETFs (exchange-traded fund), launched in 2004.
The New York Stock Exchange (NYSE) lets you buy or sell shares anytime, just like stocks. Each share of the ETF is worth one-tenth of an ounce (oz) of gold.
Investing in Gold Stocks
Gold stocks represent publicly traded investments centred around gold. You can invest in the gold stock market through the following entities:
- Gold-focused ETFs: These funds hold physical gold or gold mining company shares.
- Mining companies: These companies locate gold deposits, create mines, and sell gold and other precious metals.
- Gold streaming and royalty companies: These firms pay upfront fees to mining companies for the following:
- A portion of the mine’s revenue (for example, a mining royalty)
- The right to acquire future production of a particular metal from a specific mine for a predetermined price (such as a mining stream)
Is Gold a Good Stock to Buy?
Gold stocks, also known as “paper golds”, function similarly to any other stock. You invest in a company hoping it will succeed and your investment will compound.
With gold stocks, you’re buying a company with a specific tie-in to gold. Your investment mimics the gold price rather than the stock market. Consequently, when the stock market crashes, your gold stock investment is less likely to lose value, but keep in mind – there are no guarantees.
Here are two other reasons why gold stocks can be a good purchase:
- You can easily liquidate gold. Because gold stocks function like traditional stocks, selling them is easy.
You don’t have to wait long to withdraw the stocks from your precious metals account and worry about selling them.
These stocks can be traded promptly, providing flexibility to investors.
- You don’t need to store gold. Physical gold requires secure storage.
In contrast, gold stocks are equivalent to any other stock in your portfolio, so there is no need to collect them separately or store them.
To make informed investment decisions, stay knowledgeable on the market performance of gold stocks, including the U.S. dollar (USD)-denominated previous close.
Which Is Better, Gold or Gold Stock?
The answer to this question depends on what you’re looking for when investing in the gold industry.
“Safe haven” assets such as gold provide capital protection but not investment opportunities. In contrast, gold mining stocks don’t qualify as safe assets, as they are risky, but they can provide significant returns.
Meanwhile, gold can be used for industrial and investment purposes.
For investment reasons, companies might mint or transform gold into coins, bars, ingots, and wafers to protect against inflation and store value.
In the United Kingdom, investing in gold is VAT-exempt. However, the government might subject the metal to taxation if you are a producer or refiner of investment gold.
Suppose you supply investment gold for industrial purposes in the ordinary course of your business. In that case, you may choose to tax your supplies.
Investment gold has the following categories:
- Gold of a purity of at least 995 thousandths in the form of a bar, wafer, or coin of a weight accepted by the bullion markets
- Gold coins minted after 1800 have the following characteristics:
- A purity of not less than 900 thousandths
- Originated in a country where it was legal tender
- Usually sold at a price less than 180% of the open market value of the coin’s gold content
Top Gold Mining Stocks
Dozens of companies specialise in mining gold, so investors have plenty of options.
Here were some of the top gold stocks in 2023:
Barrick Gold Corporation
Barrick Gold Corp., one of the leading gold miners in the world, has its headquarters in Toronto, Ontario, Canada.
Barrick shares trade on the NYSE under the symbol GOLD and the Toronto Stock Exchange (TSE) under ABX.
Through 2022, inflation significantly impacted the mining industry, primarily through higher energy prices and related effects. This scenario pressured Barrick Gold Corporation’s margins when copper and gold prices declined.
Still, Barrick generated over $11 billion in revenue.
Franco-Nevada Corporation (FNV)
Franco-Nevada is another Canada-based royalty and streaming company. FNV has a diversified portfolio covering gold, silver, iron ore, platinum group metals and oil and gas. In 2022, gold accounted for 55% of its revenue.
VanEck Vectors Gold Miners ETF
VanEck Gold Miners ETF (GDX), one of the world’s largest ETFs, aims to replicate, excluding fees and other expenses, the price and yield performance of the NYSE Arca Gold Miners Index, a benchmark for gold mining companies’ overall performance.
As of early 2023, VanEck has close to $15 billion in assets. At the time, the ETF held shares in 48 companies that mine gold.
Southern Copper Corp. (SCCO)
Southern Copper Corporation operates mines in Mexico and Peru. The company owns and manages open pit mines and metallurgical facilities that produce copper, zinc, and gold.
In the first quarter of 2022, SCCO’s net sales were 9.1% higher than in 2021.
Here is the revenue breakdown with the contribution percentage from each product:
- Copper (+17.7%)
- Molybdenum (+69.7%)
- Silver (3.8%)
- Zinc (3.6%)
- Other products, including gold and sulfuric acid (4.6%)
Rio Tinto PLC (RIO)
In 2022, Rio Tinto, an Australian-British multinational corporation and one of the world’s leading mining companies, closed a $525 million sale of a gold royalty at the Cortez Complex in Nevada, USA.
Wheaton Precious Metals Corp (WPM)
Wheaton Precious Metals ranks as one of the world’s largest silver and gold streaming companies by revenue, operating cash flow, and precious metals production.
WPM has entered into 19 precious metal joint ventures with 15 operating partners, including Barrick Gold, Vale, Goldcorp, and Glencore.
Royal Gold, Inc. (RGLD)
Royal Gold has its headquarters in Denver, Colorado, United States. This top-tier precious metals streaming and royalty company reported the following financial outcomes for the first quarter of 2023:
- Strong financial performance with revenue of $170.4 million and operating cash flow of $108.7 million
- A revenue split of 12% silver, 14%copper, and 71% gold
Newmont Corp. (NEM)
Colorado-based Newmont might be the world’s biggest gold miner, producing over 5.8 million ounces of gold in 2020. NEM retained its position as one of the world’s largest gold mining companies despite a 9% year-on-year production decline.
Agnico Eagle Mines Ltd. (AEM)
This company produced approximately 3,135,007 oz or 3,135 kilo-ounce (koz) of gold in 2022, up to a 50% increase from 2021 (2,086,405 ounces).
The company’s 2022 gold production might have been higher year-on-year primarily due to the inclusion of output from Fosterville, Detour Lake, and Macassa mines.
Picking the Best Gold Stocks
Choosing the ideal gold stock depends on your preferences and investment objectives. It will help to consult an expert to determine the current top gold reserves.
Meanwhile, some gold mining companies or bullion dealers also offer real-time insights into stock performance through a watchlist or ticker report. You can use this information to develop your gold investment strategy.
Still, investors must assess their investment approach and risk tolerance before selecting the most suitable gold stock.
Engaging in in-depth discussions with a financial advisor can help when considering the acquisition of gold stocks due to the difficulty in timing the market.
Prioritise researching thoroughly and seeking professional guidance to identify the best time to invest in gold stocks.
Lastly, consider expanding your investment horizons with emerging assets like cryptocurrencies while closely monitoring market trends.
A Top Share With Enormous Growth Potential
The future potential for gold price appreciation hinges on many factors, including the following:
- Global economic conditions
- Inflationary pressures
- Central bank policies
- Geopolitical tensions
- Interest rate hikes
Accurately forecasts of gold’s future value remain challenging due to the interplay of these variables, not to mention gold’s finite nature.
However, it is worth noting that gold’s diverse applications, ranging from jewellery to electronics, may drive heightened demand, potentially leading to price surges as scarcity sets in.
Dividends, balance sheets, currencies, and market cap (the total value of a company’s outstanding shares) play vital roles in determining gold’s overall investment appeal.
Disclaimer: The information provided in this article is for general informational purposes only and does not constitute financial advice. It is not intended to be a recommendation to buy or sell any financial instrument or engage in any investment activity.
While we strive to provide accurate and up-to-date information, we do not guarantee its completeness or accuracy. We rely on various sources for the information presented, and we cannot guarantee the reliability or accuracy of these sources.
The information provided here does not necessarily reflect the products or services offered by our company. Any mention of financial products or services is for informational purposes only and should not be considered an endorsement.
All investments involve risk, including the potential for loss of principal.
This information should not be considered as financial advice. You should always seek professional financial advice from a qualified advisor before making any investment decisions.
References
- Gold responds in March
https://www.vaneck.com.au/blog/gold/gold-responds-and-reminds-in-march/
- GLD 10th Anniversary
https://www.sec.gov/Archives/edgar/data/1222333/000119312514418637/d824393dfwp.htm
- Gold imports and exports (VAT Notice 701/21)
https://www.gov.uk/guidance/gold-acquisitions-imports-investments-and-vat-notice-70121
- Financial Review
https://www.barrick.com/English/investors/annual-report/financial-review/default.aspx
- Southern Copper Corporation
https://www.sec.gov/Archives/edgar/data/1001838/000155837022007434/scco-20220331x10q.htm
- Annual Report 2022
https://minedocs.com/23/Rio_Tinto-AR-2022.pdf
- Royal Gold Reports Strong Start to 2023 with Solid First Quarter Revenue, Operating Cash Flow and Earnings
