The more you listen to the Wall Street pundits, especially the ones in the financial media, the more they are closing in on the ultimate contrarian indicator. That’s when they present the worst four words in the history of investing: “It’s different this time.” Sure it is, teleprompter readers. With the market trading at the highest multiples in years, and the FOMO (fear of missing out) factor driving prices ever higher, you can bet that the much-needed correction is right down the road. The issue is not if, but when.
The positives for the market remain, not the least of which is continued central bank support. However, now is the time for investors to take a deep breath and see if a little portfolio hedge might be in order.
Despite the market surge, gold has held in there over the past year, and with myriad domestic concerns (such as the presidential impeachment trial in the Senate) and geopolitical worries (note recent missile attacks and potential confrontations in the Middle East), it makes sense to play it safe.
A new RBC report launches coverage on 15 North American senior gold producers and royalty companies. The analyst noted this when reviewing the precious metal:
Since the gold price bottomed in early 2016, prices have risen by ~45% over a period of >200 weeks. Compared to prior cycles, current bull market returns have been below-average, while the duration of this price cycle has been above-average. In 2020, we view gold prices as supported by ongoing monetary policy stimulus, growth outlook uncertainties, and improving sentiment, thereby improving the outlook for gold equity financial flexibility and free cash flow generation.
Four stocks that trade in U.S. dollars are rated Outperform, and all make sense for investors to add as a defensive position in growth portfolios.
This is a small-cap gold stock for aggressive investors looking for sector exposure. B2Gold Corp. (NYSE: BTG) is a global, growth-oriented mid-tier gold producer whose primary assets include gold mines located in Nicaragua (La Libertad and El Limon), the Philippines (Masbate), Namibia (Otjikoto) and Mali (Fekola).
The company has stated that in 2019, based on current assumptions, consolidated gold production is forecast to be between 935,000 and 975,000 ounces, with cash operating costs projected to be $520 to $560 per ounce and all-in sustaining costs at $835 and $875 per ounce.
In addition, the company announced earlier positive drill results from the Mamba zone, which is within the Anaconda area, approximately 20 kilometers from the Fekola Mine, as well as positive infill drill results from the Fekola mineral resource area and step-out results north of the Fekola resource.
RBC has a price target of $4.50 on the shares. The Wall Street consensus target is $3.50, and the shares closed Thursday’s trading at $4.09 apiece.
This is one of the top companies in the industry, and its shares have backed up from the late summer and early fall rally and are offering a solid entry point. Barrick Gold Corp. (NYSE: GOLD) and Randgold Resources completed their merger on January 1, 2019. This has created the world’s largest gold company in terms of production, reserves and market capitalization. Gold companies were involved in some of the largest corporate mergers of 2019.
On July 1 last year, Barrick and Newmont created the Nevada Gold Mines joint venture on a 61.5% to 38.5% basis with Barrick as the operator. Nevada Gold Mines is targeting $450 million to $500 million in annual operational and other synergies over the next five years.
Barrick Gold says its gold production for 2019 is expected to come in near the top end of its guidance, while copper production is forecast to be more than its earlier expectations. Preliminary results indicate it produced 5.5 million ounces of gold last year, compared with its guidance for between 5.1 million and 5.6 million ounces.