Is Now the Right Time to Invest in Gold Stocks?
Gold is a soft yellow metal often used in jewelry and decoration. Gold was once used as a value standard for currency in the United States. Today, people have an opportunity to invest in gold through stocks, exchange-traded funds (ETFs), exchange-traded notes (ETNs), options, and certifications besides owning it in physical form. Gold companies explore and operate gold mines across the world. Several well-known gold mining companies are listed on stock exchanges like NASDAQ, the New York Stock Exchange (NYSE), London Stock Exchange (LSE), and many more.
The estimated market size of the gold and silver ore mining industry of the United States is $12.7 billion in 2021. The industry has grown at a compound annual growth rate (CAGR) of 3.5% between 2016 and 2021.
The stock prices of gold mining companies may fluctuate based on the changing gold prices in the international markets. Investors should keep an eye on how gold miners react to fluctuations in demand and the price of gold. The steady increase in gold prices over the last few years enabled gold mining organizations to report better profitability and generate free cash flows.
There are several financially stable gold mining stocks trading on stock markets. In this article, we’ll review the top gold mining stocks to add to your watchlist!
The Best Gold Mining Companies & Stocks to Watch
The best gold mining companies are operating in countries like Australia, Russia, China, the United States, Canada, Mexico, and South Africa, where gold mining reserves are very abundant. Here is the list of gold mining companies you may like to monitor and make an investment in.
Avino Silver & Gold (NYSE: ASM)
Yamana Gold (NYSE: AUY)
Harmony Gold Mining Company (NYSE: HMY)
IAMGOLD Corp. (NYSE: IAG)
All data and figures are according to the date of publication.
1. Avino Silver & Gold (NYSE: ASM)
Avino Silver & Gold is a leading gold and silver mining organization headquartered in Vancouver, Canada. It operates the wholly-owned Avino mine located in Durango, Mexico. Avino mine has 20 named veins and 50 additional veins. The organization also operates several exploration projects in Mexico and Canada. A few of them include Ana Maria Project, Eagle Project, Minto Project, El Laberinto Project, and Olympic Project.
Avino is one of the few mining organizations that remained flexible both operationally and financially during the COVID-19 pandemic. With sufficient cash and working capital in hand, the organization can withstand unfavorable changing business conditions like COVID-19.
Avino has gained the attention of investors after it paid the debt of over $7 million in 2020. It is poised to take whatever advantage the upcoming years may offer in terms of acquiring new mines and increasing the production capacities at existing mines through its lean corporate structure. The company-wide cost reduction initiatives announced in 2018 have helped the organization to reduce administrative costs by 9% in 2020.
Investors are likely to keep this stock on the watchlist for its diverse range of mining projects, lean corporate structure, and strong liquidity position.
2. Yamana Gold (NYSE: AUY)
Yamana Gold is Canada’s leading gold and silver mining organization. It operates a diverse range of mining projects in Canada, Brazil, Chile, and Argentina. As of December 2020, the organization has five producing mines: El Penon, Jacobina, Canadian Malartic, Minera Florida, and Cerro Moro.
In addition to these five operating mines, Yamana has two more projects in the pipeline: the Mara Project and Wasamac Project. Mara Project has mineral reserves of 7.4 million ounces of gold and 11.7 billion pounds of copper. Yamana has 52.8% ownership interest in the Mara Project. With a 28-year mine-life, Mara is likely to offer long-term sustainability to Yamana. On the other hand, the Wasamac gold mine project, in which Yamana has 100% ownership, has 11 years of mine life and 6053 tonnes of ore production capacity per day.
Over the past few years, Yamana focused on repaying the debt and generating free cash flows. For instance, the net outstanding debt of the organization has come down to $782.9 million after it paid down $801 million and $220 million of its total debt in 2019 and 2021 respectively. The debt reduction enables the organization to improve financial resilience and pursue low capital cost growth initiatives.
Investors may keep Yamana Gold on the watchlist for its diverse range of operating and advancing projects and debt reduction initiatives.
3. Harmony Gold Mining Company (NYSE: HMY)
Harmony Gold Mining Company is headquartered in Randfontein, South Africa. It operates several surface, underground and open-pit gold and silver mines in South Africa and Papua New Guinea.
As of June 2021, Harmony has gold resources of 141.2 million ounces, an increase of 19% from the last year. The continuous exploration and acquisition activities may further increase the gold mineral resources of Harmony in the coming years and contribute to the organization’s longevity and long-term sustainability. For instance, the organization acquired AngloGold Ashanti’s South African mining assets, including Moab Khotsong in 2018 and Mponeng in 2020.
Harmony has been consistently generating free cash flow for the last few years. The free cash flow enables the organization to acquire more mining assets and reduce the debt. Harmony is likely to make it onto the watchlist of gold mining stocks because of its high-performing operating mines, ability to generate operating free cash flow, and commitment to acquire new mining assets.
4. IAMGOLD Corp. (NYSE: IAG)
IAMGOLD Corp. is a leading gold mining organization that operates gold mines in North America, South America, and West Africa. A few of its mining projects include Rosebel in Suriname, Essakane in Burkina Faso, Westwood in Canada, and Boto Gold in Senegal. IAMGOLD also operates several Greenfield projects in West Africa and South America.
IAMGOLD follows top-notch corporate governance principles. Mining organizations are under scrutiny with regards to environmental, social, and governance (ESG) aspects. However, IAMGOLD operates in a trustworthy manner; it received the highest rating GA-1 from Moody’s first assessment of Corporate Governance for Metals and Mining Sector. For investors who seek to associate with ethical companies in the mining sector, IAMGOLD may be the right investment destination.
The organization has an attractive pipeline of development projects that have a mine life of more than 20 years. For instance, the Cote Gold Project, in which IAMGOLD has 92% ownership interest, has a mine life of over 18 years. IAMGOLD also holds 90% ownership interest in the Boto Gold Project which has a mine life of 20 years and indicated gold mineral reserves of 40,600 tons.
Factors such as an attractive project pipeline, good corporate governance principles, and financial stability reflect IAMGOLD’s potential to generate a handsome return on investment in the long term.
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The demand for gold is increasing year after year. Precious metal companies have been exploring and acquiring various gold mining assets to meet the increasing demand and reap the rewards. The factors such as accessibility to gold mining resources, ability to achieve economies of scale, and corporate governance principles would play a vital role in the success of a mining organization. Investors may also like to evaluate the liquidity position, operating free cash flow, dividend yield, and debt levels before making an investment decision.
The four gold penny stocks reviewed here have the potential to generate good returns in the future. Investors can also monitor other gold producers like Newmont Corporation (NYSE: NEM), Barrick Gold (NYSE: GOLD), and Franco-Nevada (NYSE: FNV) as they also have huge gold reserves and potential projects in the pipeline.
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Disclaimer: All investments involve the risk of loss. Nothing on this website should be misconstrued as investment advice. Any reference to an investment’s historical or projected performance is not a recommendation or guarantee of profit or desired outcome.