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Tuesday, April 14, 2020 11:03:24 PM
Gold Resource Corp made this TOP 10 list for 2020............
Top 10 Gold Stocks List 2020
Top 10 Gold Stocks List 2020
By Rob Otman
Originally posted February 13, 2020
Gold prices hovered around $1,300 for the first half of last year. But since, the shiny metal has climbed over 20%. In the first few months of 2020, gold is trading above $1,550 per ounce. If the price continues to climb, it might be a great time to add a few top gold stocks to your portfolio.
That’s why I’ve put together the following list of gold stocks. It includes gold mining companies by market cap. This is a great starting point to find high risk-to-reward investment opportunities. And below the list, I’ll show you how to invest in these companies.
Top Gold Stocks List to Watch in 2020
*Stock data from February 12, 2020
Ticker Name Market Cap Exchange
NEM Newmont Corp. $36.1 Billion New York
GOLD Barrick Gold Corp. $32.8 Billion New York
KL Kirkland Lake Gold $10.2 Billion New York
KGC Kinross Gold Corp. $8.4 Billion New York
RGLD Royal Gold $6.9 Billion Nasdaq
AUY Yamana Gold $3.6 Billion New York
CDE Coeur Mining $1.4 Billion New York
MUX McEwen Mining $0.4 Billion New York
GORO Gold Resource Corp. $0.3 Billion New York
GDRZF Gold Reserve $0.2 Billion OTC
Gold Mining Company Highlights
There are a few standout companies on this list. Here are some company highlights:
Barrick Gold produced more than 5.4 million ounces of gold in 2019. It’s one of the largest gold mining companies in the world. On top of that, it also produced 432 million pounds of copper. Both of these numbers were near the top end of estimates. Barrick is firing on all cylinders and profits should climb with gold prices.
Kirkland Lake produced close to one million ounces of gold in 2019. The gold production came from operations in Canada and Australia. And Kirkland also focuses on producing healthy cash flow and a strong balance sheet. As of September 30, 2019, the company had a cash balance of $615 million and no debt. That’s not common in the mining industry.
Royal Gold has interests located in some of the world’s most prolific gold regions. It has major operations in the Dominican Republic, Chile, Mexico and Canada. This diversification helps mitigate some of the geo-specific and political risk.
Yamana Gold is based in Canada but operates throughout the Americas. It’s getting close to producing one million ounces of gold in a year. And on top of that, it mines for silver and copper. The company projected production of 10 million ounces of silver and over 60 million pounds of copper in 2019. This helps diversify its revenue streams.
Gold prices have gained 15% so far this year and surpassed the $1,700 an ounce threshold for the first time in seven years. This was primarily driven by the coronavirus-induced crisis that triggered apprehensions regarding the global economic growth. This, in turn, sent investors scurrying for safe-haven assets like gold. The Fed has slashed interest rates to zero. Notably, lower the interest rates, lesser will be the opportunity cost of holding non-yielding bullion, making gold an attractive option for investors holding other currencies. Further, lower oil prices and fears of supply crunch with miners halting their operations as per government mandates to stem the coronavirus spread have also contributed to the price movement. Further, mining companies are major consumers of energy with around 50% of their production costs closely linked to energy prices. The current combination of higher gold prices and lower oil prices will translate into improved operating margins and higher free cash flow for miners.
Mining deals had lost momentum in recent years with companies forced to cut debt levels and slash capital expenditure thanks to lower gold prices. Given that gold production is anticipated to drop eventually owing to scarcity of new discoveries and depleting existing resources, miners prefer to build up reserves through acquisitions rather than digging for new ones that are inherently risky and capital intensive.
Going forward, major markets India and China (that roughly account for around 50% of consumer gold demand) will sustain demand for gold. The expanding middle class in China and India, and broader economic growth will have a significant impact on gold demand. Use of gold across energy, healthcare and technology is on the rise. Moreover, the yellow metal has long been considered as a safe haven investment in times of financial or political uncertainty. Emerging market central banks are turning their attention to gold after years of exposure to the U.S. dollar, and as a natural currency hedge against other reserve currencies. So, there will be an eventual demand-supply imbalance that is likely to drive gold prices, which bodes well for the industry over the long haul.
The Mining- Gold Industry has outperformed both the S&P 500 Index and the Basic Material sector in a year’s time. While the stocks in the industry have collectively advanced 40.7%, the S&P 500 has declined 4.6%. Meanwhile, the sector has slumped 25.8%.
On the basis of forward 12-month EV/EBITDA ratio, which is a commonly used multiple for valuing gold-mining companies, we see that the industry is currently trading at 5.96X compared with the S&P 500’s 12.29X and the Basic Material sector’s forward12-month EV/EBITDA of 5.95X. This is shown in the charts below.
.jpg)
Enterprise Value/EBITDA (EV/EBITDA) F12M Ratio
.jpg)
Over the last five years, the industry has traded as high as 8.68X and as low as 4.34X, with median being at 5.96X.
Bottom Line
Gold will continue to be the preferred investment option supported by the environment of low interest rates and coronavirus-induced global slowdown. Lower mined gold supply, higher demand and geopolitical tensions are likely to drive prices north, which bode well for gold-miners.
Top 10 Gold Stocks List 2020
Top 10 Gold Stocks List 2020
By Rob Otman
Originally posted February 13, 2020
Gold prices hovered around $1,300 for the first half of last year. But since, the shiny metal has climbed over 20%. In the first few months of 2020, gold is trading above $1,550 per ounce. If the price continues to climb, it might be a great time to add a few top gold stocks to your portfolio.
That’s why I’ve put together the following list of gold stocks. It includes gold mining companies by market cap. This is a great starting point to find high risk-to-reward investment opportunities. And below the list, I’ll show you how to invest in these companies.
Top Gold Stocks List to Watch in 2020
*Stock data from February 12, 2020
Ticker Name Market Cap Exchange
NEM Newmont Corp. $36.1 Billion New York
GOLD Barrick Gold Corp. $32.8 Billion New York
KL Kirkland Lake Gold $10.2 Billion New York
KGC Kinross Gold Corp. $8.4 Billion New York
RGLD Royal Gold $6.9 Billion Nasdaq
AUY Yamana Gold $3.6 Billion New York
CDE Coeur Mining $1.4 Billion New York
MUX McEwen Mining $0.4 Billion New York
GORO Gold Resource Corp. $0.3 Billion New York
GDRZF Gold Reserve $0.2 Billion OTC
Gold Mining Company Highlights
There are a few standout companies on this list. Here are some company highlights:
Barrick Gold produced more than 5.4 million ounces of gold in 2019. It’s one of the largest gold mining companies in the world. On top of that, it also produced 432 million pounds of copper. Both of these numbers were near the top end of estimates. Barrick is firing on all cylinders and profits should climb with gold prices.
Kirkland Lake produced close to one million ounces of gold in 2019. The gold production came from operations in Canada and Australia. And Kirkland also focuses on producing healthy cash flow and a strong balance sheet. As of September 30, 2019, the company had a cash balance of $615 million and no debt. That’s not common in the mining industry.
Royal Gold has interests located in some of the world’s most prolific gold regions. It has major operations in the Dominican Republic, Chile, Mexico and Canada. This diversification helps mitigate some of the geo-specific and political risk.
Yamana Gold is based in Canada but operates throughout the Americas. It’s getting close to producing one million ounces of gold in a year. And on top of that, it mines for silver and copper. The company projected production of 10 million ounces of silver and over 60 million pounds of copper in 2019. This helps diversify its revenue streams.
Gold prices have gained 15% so far this year and surpassed the $1,700 an ounce threshold for the first time in seven years. This was primarily driven by the coronavirus-induced crisis that triggered apprehensions regarding the global economic growth. This, in turn, sent investors scurrying for safe-haven assets like gold. The Fed has slashed interest rates to zero. Notably, lower the interest rates, lesser will be the opportunity cost of holding non-yielding bullion, making gold an attractive option for investors holding other currencies. Further, lower oil prices and fears of supply crunch with miners halting their operations as per government mandates to stem the coronavirus spread have also contributed to the price movement. Further, mining companies are major consumers of energy with around 50% of their production costs closely linked to energy prices. The current combination of higher gold prices and lower oil prices will translate into improved operating margins and higher free cash flow for miners.
Mining deals had lost momentum in recent years with companies forced to cut debt levels and slash capital expenditure thanks to lower gold prices. Given that gold production is anticipated to drop eventually owing to scarcity of new discoveries and depleting existing resources, miners prefer to build up reserves through acquisitions rather than digging for new ones that are inherently risky and capital intensive.
Going forward, major markets India and China (that roughly account for around 50% of consumer gold demand) will sustain demand for gold. The expanding middle class in China and India, and broader economic growth will have a significant impact on gold demand. Use of gold across energy, healthcare and technology is on the rise. Moreover, the yellow metal has long been considered as a safe haven investment in times of financial or political uncertainty. Emerging market central banks are turning their attention to gold after years of exposure to the U.S. dollar, and as a natural currency hedge against other reserve currencies. So, there will be an eventual demand-supply imbalance that is likely to drive gold prices, which bodes well for the industry over the long haul.
The Mining- Gold Industry has outperformed both the S&P 500 Index and the Basic Material sector in a year’s time. While the stocks in the industry have collectively advanced 40.7%, the S&P 500 has declined 4.6%. Meanwhile, the sector has slumped 25.8%.
On the basis of forward 12-month EV/EBITDA ratio, which is a commonly used multiple for valuing gold-mining companies, we see that the industry is currently trading at 5.96X compared with the S&P 500’s 12.29X and the Basic Material sector’s forward12-month EV/EBITDA of 5.95X. This is shown in the charts below.
.jpg)
Enterprise Value/EBITDA (EV/EBITDA) F12M Ratio
.jpg)
Over the last five years, the industry has traded as high as 8.68X and as low as 4.34X, with median being at 5.96X.
Bottom Line
Gold will continue to be the preferred investment option supported by the environment of low interest rates and coronavirus-induced global slowdown. Lower mined gold supply, higher demand and geopolitical tensions are likely to drive prices north, which bode well for gold-miners.
