Looking for the best gold stocks? These TSX-listed gold companies have seen the biggest year-to-date gains so far in 2019.
Between higher prices and mergers and acquisitions, some gold companies have made progress and expanded the resource potential of their assets. Now that Q2 is over, the Investing News Network has rounded up the five top gold stocks on the TSX with the biggest share price gains year-to-date.
Before exploring some of the top stocks this year, it is important to understand if gold stocks are right for you. To give you a better sense of this method of investing, the Investing News Network has broken down what a gold stock is, how it can be a useful commodity in an investor’s portfolio and the ways in which to invest in gold stocks to increase one’s wealth.
What is a gold stock?
Like all publicly listed stocks, gold companies issue shares that are available for investors to trade. When you purchase shares of a gold stock, you are essentially purchasing a stake in the company, making financial returns or losses from its profits.
There are two main paths to take when purchasing from companies with gold mines. One way of gold stock investing is by making purchases from major mining companies. The other way of trading on the stock market is by investing in a gold mining stock through a junior miner. While both avenues have their pros and cons, it’s worth noting that if you invest in a junior gold stock, it can be inherently risky. Since these companies often fail due to the risks associated with exploration and development, you stand a greater chance of also taking on a loss when you buy gold this way.
Finally, market participants can also obtain gold shares through investing in gold streaming and royalty companies, such as Wheaton Precious Metals (TSX:WPM,NYSE:WPM).
Although no gold stock investing is 100 percent foolproof, backing a successful mining company in the precious metals space can alleviate some of the stress of a down stock market when you keep in mind that if a company’s share price goes down, it becomes more affordable to purchase and investors can more than likely anticipate that it will rise again and turn a profit.
Why should you invest in gold stocks?
As concerns around an economic growth slowdown and a basket of geopolitical issues continue to plague the market, investors are turning to gold for its safe haven nature. For many market participants, gold has been a reliable diversification within their portfolios due to the fact that it has the ability to act as a hedge against portfolio volatility.
Additionally, the second half of 2019 has seen gold entering a period of prosperity, making gains not experienced in years as it shot up over 7 percent by the close of Q2. Due to the fact that, as the value of the metal goes up, gold stocks rise even further, this form of investing in gold can be an ideal way for investors to gain exposure to the metal.
With that in mind, there may be no better time than the present when it comes to buying gold stocks. Below are a few more reasons why it may be enticing for you as an investor to enter the gold market.
While purchasing physical gold bullion via gold bars, gold bullion coins and jewelry is the most direct way to purchase the yellow metal, it also has the payment of high commissions attached to it, as well as additional costs that come from transportation, storage and insurance of the metal.
Due to the fact that gold stocks are not a tangible investment, market participants are owning the metal without having to pay the fees associated with physical assets.
Although investing in gold stocks is an indirect way to gain exposure to the precious metal, there is an upside to this because it offers more growth potential. Since 10 ounces of gold bullion today will remain the same 10 ounces of gold in the years that follow, it doesn’t produce the same kind of income stream. Many investors, including Warren Buffett, shy away from the yellow metal for that very reason.
However, because gold companies tend to expand over time, investors can benefit from gains in gold production — a purchasing power that does not happen when you buy gold bullion.
How to invest in gold stocks
INN has put together a handy guide of investment tips, which would be beneficial to anyone looking to invest in gold on the stock market.
The main takeaway? You have options, so educate yourself on the company itself to production levels, supply and demand, cash flows, quarterly results and even the price of gold. The more you know, the better decisions you will be able to make when investing in stocks. Here are a few suggestions from people well-versed in the industry.
Look for good management — This will make success more likely and enable you to differentiate between a potentially prosperous stock and one that may never bring value to your portfolio.
Buy quality and look for “when” stories — Brian Leni of Junior Stock Review suggested that investors position themselves well in quality companies, adding that it’s best to look for “when,” not “if,” stories.
Find the difference between price and value — Try and determine what the value of a company is and then try and get stock from that company at a lower price than its value.
Think long term — Avoid going for the low hanging fruit of hot markets and do some research into companies that are in the early stages of exploration, as they could be more profitable long term.
Remember to look for flaws — Be realistic and make sure not to be blinded by the positive features that companies lead with. According to Brent Cook of Exploration Insights, “Nine times out of 10 there will be a fatal flaw that shows up.”
What are the best gold stocks to buy?
The list below was generated on August 15, 2019, using TradingView’s stock screener, and all companies listed had market caps above C$50 million at that time.
1. Eldorado Gold (TSX:ELD)
Current share price: C$11.67; year-to-date gain: 191.75 percent
Eldorado Gold’s portfolio includes gold and polymetallic assets at various stages of exploration, development and production. The company has existed for over two decades and currently operates on three continents.
At the beginning of May, the miner announced that it produced 82,977 ounces of gold in Q1, reiterating its full-year production guidance of 390,000 to 420,000 ounces of the yellow metal. On June 5, Eldorado reported the completion of a US$300 million senior secured second lien notes offering and a US$450 million senior secured credit facility.
2. Wallbridge Mining Company (TSX:WM)
Current share price: C$0.43; year-to-date gain: 165.63 percent
Founded in 1996, Wallbridge Mining Company has several assets in Sudbury, Ontario, along with two projects in Quebec. Additionally, it has an 11.5 percent stake in Carube Copper (TSXV:CUC), which gives the company access to copper and gold exploration activity in British Columbia and Jamaica.
On May 15, the miner announced that it had closed a private placement worth C$7 million with Eric Sprott. In return, Sprott received 29,166,667 common shares priced at C$0.24 each.
Towards the end of the quarter, the company intersected 3.93 grams per tonne (g/t) gold over 20.72 meters, including 55.95 g/t gold over 1.24 meters at its Fenelon gold property.
3. Alacer Gold (TSX:ASR)
Current share price: C$5.75; year-to-date gain: 128.17 percent
Alacer Gold has an 80 percent stake in the Çöpler gold mine in Turkey. Çöpler has a mine life of 20 years, and the company’s goal is ultimately to produce from multiple mines in the country.
In mid-June, the miner reached commercial production at its Çöpler sulfide plant, where over 22,000 ounces of gold were recovered.
“Achieving commercial production is a significant milestone. We continue to tune and optimize the plant and expect quarter-on-quarter improvements over the remainder of 2019,” said Rod Antal, Alacer Gold’s president and CEO.
4. Tanzanian Royalty Exploration (TSX:TNX)
Current share price: C$1.08; year-to-date gain: 125 percent
Gold-focused Tanzanian Royalty Exploration has assets in the United Republic of Tanzania. Its advanced-stage projects include the Buckreef, Kigosi and Itetemia.
At the end of May, the miner completed Phase 1 of a planned three phase drill program with the goal of increasing the robust economics of the Buckreef project.
The company released the final drill results from Phase 1, announcing that it intercepted 89.6 meters or approximately 294 feet of continuous gold mineralization.
5. Detour Gold (TSX:DGC)
Current price: C$23.92; year-to-date gain: 107.46 percent
Detour Gold owns and operates the Detour Lake mine in the jurisdiction of northern Ontario. Currently, Detour Lake is one of the largest gold producing mines in Canada, with production exceeding 600,000 ounces per year and mineral reserves of 15.4 million ounces of gold.
At the end of July, the company announced its Q2 results, noting that it had garnered gold production of 150,079 ounces.
The miner also reported revenues of US$202 million on gold sales of 153,748 ounces at an average realized price of US$1,309 per ounce and net earnings of US$16 million.
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Securities Disclosure: I, Nicole Rashotte, currently hold no direct investment interest in any company mentioned in this article.
Editorial Disclosure: The Investing News Network does not guarantee the accuracy or thoroughness of the information reported in the interviews it conducts. The opinions expressed in these interviews do not reflect the opinions of the Investing News Network and do not constitute investment advice. All readers are encouraged to perform their own due diligence.