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Best Gold Stocks to Buy in 2021

Author: Jim Mwangi

Gold has traditionally been used as a hedge against volatility. The global crisis precipitated by the Covid-19 outbreak last year pushed the price of gold to record highs of more than $2,000 per ounce. The same year witnessed a significant weakening of the US dollar which caused alternative assets such as gold to rise significantly. These and other factors were bullish for gold stocks in the year 2020.

Although the gold price fell back between August 2020 and March 2021, it then started to rise again, thus presenting investors with an opportunity to have bought on the dip.

This guide tells you about gold stocks rather than gold itself: how to trade gold stocks, and which might be the best ones to trade.

Where Can I Trade Gold Stocks?

As already hinted, to trade gold stocks you need a stockbroker. All the trading skills in the world won’t help you if you sign up with the wrong broker that doesn’t execute your instructions efficiently, or worse— runs away with your money. Finding the best broker isn’t easy because you can’t try them all, so we have shortlisted some of the best brokers we know.

1
Barrick Gold (GOLD)
Our score
10
Gold mining operations in 13 countries
29.16% sales growth in 2020
P/E ratio of 15
Description:
Payment Methods
Full regulations list:
2
Jaguar Mining (JAG)
Our score
9.3
Exclusively mines gold
One of the fastest developing gold miners
3.4% dividend yield
Description:
Payment Methods
Full regulations list:
3
Vale S.A. (VALE)
Our score
8.7
Largest producer of iron ore and nickel
Headquartered in Brazil
$88.9B market cap
Description:
Payment Methods
Full regulations list:
4
Franco-Nevada (FNV)
Our score
8.5
Leading gold royalty and streaming company
Lower-risk opportunity to invest in the mining industry
High returns over the last 5 years
Description:
Payment Methods
Full regulations list:
5
B2Gold Corp (BTG)
Our score
7.9
Exploration company focusing on gold mines
Company with a positive cash flow
P/E ratio of 8
Description:
Payment Methods
Full regulations list:

What Are Gold Stocks?

Anyone wishing to invest in gold can do so by buying physical gold as coins or bullion bars, or by speculating on gold futures contracts.

If you can’t trade physical gold or gold contracts because your stockbroker won’t let you, or because you’re cautious about leveraged financial instruments such as contracts-for-difference (CFDs) or spread bets that amplify your losses as well as your gains, you can gain indirect exposure to the gold price by investing in companies that mine, process, sell, distribute or store gold. These companies are the “gold stocks” that are the theme for this guide.

Gold stocks can be traded via virtually any stockbroker account, but beware that the prices of gold-related companies don’t move in exact lockstep with the price of gold itself.

How to Trade and Invest in Gold Shares?

1

Open a Trading Account

Most online brokers will let you open an online trading account for free, usually within minutes, but sometimes longer if you have to prove your identity. Once your account has been activated, it is easy to deposit funds by bank transfer, credit/debit card, or another method such as PayPal.

2

Choose Market

Take our list of suggested gold stocks as a starting point, but do your own research before searching the broker’s list(s) of stocks for the ones you wish to buy. Besides performing fundamental analysis of the gold stocks, it may also be worth performing some technical analysis of gold itself by looking at a gold price chart.

3

Place Your Trade

Once you’ve decided which gold stocks to buy (thanks to fundamental analysis) and when to buy them (thanks to technical analysis) it’s time to fill out a trade ticket. This small online form requires you to enter the amount you wish to invest or the number of shares you wish to buy before pressing the “buy” button.

Top 10 Gold Shares to Trade

The Covid-19-induced economic uncertainty helped Gold prices jump quite significantly, and gold stocks likewise. Here is our list of ten top gold stocks that you could consider buying in 2021.

  1. Barrick Gold 
  2. Agnico Eagle Mines 
  3. Kinross Gold 
  4. SSR Mining 
  5. Newmont 
  6. Freeport-McMoRan 
  7. Kirkland Lake Gold 
  8. AngloGold Ashanti
  9. Franco-Nevada 
  10. New Gold

1. Barrick Gold Corp (NYSE: GOLD)

This multinational copper and gold producer had a better than expected fourth quarter last year. If the business's future profitability remains positive, Barrick Gold could be a good stock to buy.

From a technical perspective, Barrick Gold’s share price has been rising since 2015, albeit in a volatile way. Since the price is nowhere near the all-time high price that was hit in 2011, investors may think that there is good upside potential in the long term.

The share price performance of this company demonstrates that gold stocks do not always move in lockstep with the price of gold.

2. Agnico Eagle Mines (NYSE: AEM)

Canada-headquartered Agnico Eagle Mines has a strong history of surpassing earnings expectations, and technical analysis of its stock chart points towards another terrific year.  This company enjoyed a good last quarter and good growth.

Agnico’s shares have seen their share of volatility in the past 15 years but they hit an all-time high price in August 2020, surpassing the previous high price from ten years earlier. Volatility is not necessarily a bad thing if you’re trying to make money in the markets, especially for astute investors who can correctly time their purchases. 

3. Kinross Gold (NYSE: KGC)

This mid-cap mining company has operations in various countries, including the US, Russia, Brazil, and West Africa. With a current proven and probable gold reserve of over 24 million ounces, and an estimated 2.4 million ounces in total production this year, the company is heading towards success.

The KGC share price is back to where it was way back in 1987, which may be seen as a bad thing because this company has apparently not benefited shareholders. On the other hand, investors in this company benefit from dividend payments regardless of the share price performance, and the fact that the shares have been three times as high (in 2007) means that there may be plenty of upside potential. Indeed, the shares have trended upwards since November 2018.

4. SSR Mining (NASDAQ: SSRM)

This Vancouver company mines gold and silver in Canada, Turkey, Argentina, and the USA. The numbers from 2020's full-year production showed that the company met its previous set target.

Since the company is paying dividends, and the price appears to be in an uptrend, it could be suitable as a buy-and-hold investment.

5. Newmont Corporation (NYSE: NEM)

The world's largest gold miner, Newmont Corporation, could be an exciting Gold stock to trade this year. Besides gold, the company is also an active producer of other metals, including copper, zinc, lead, and silver. It has operational assets and prospects in Africa, Australia, North American, and South America.

The share price of NEM, which is the only gold miner in the S&P 500 index, has been rising since April 2019, albeit with some volatility. It hit a new all-time high price in May 2021.

Expert Tip on Investing in Gold Shares

Gold stocks are subject to two forces: the price of the gold that they mine, refine, or sell, and the additional business pressures that all companies face. An appreciation of both factors is important when trading gold shares.
- Jim Mwangi

Why Invest in Gold Shares?

In times of uncertainty, investors have traditionally turned to gold as a “safe haven” investment, especially in the days before Bitcoin and other digital currencies. So, one of the investment cases for gold is as a hedge against other assets falling in value. If you can’t or won’t invest in gold itself, one of the few available resources is to invest in gold stocks instead, as a proxy for gold itself. But bear in mind that gold stocks do not rise and fall exactly in line with the gold price.

Alternatively, you might ignore the price of gold entirely when making the case for investing in gold stocks. After all, these are businesses — just like any other — that can rise and fall in value as a result of innovations, management changes, and other factors.

Frequently Asked Questions

  1. There are many ways to manage risk. Choose a regulated broker that will keep your money safe. Diversify across several stocks so that your investments can’t be wiped out entirely by a single stock going bust. Apply stop orders to your open positions, to close them automatically if the price goes against you.

  2. Most countries’ tax authorities will expect you to pay some form of income tax or capital gains tax on your trading or investment profits, so do check before assuming that all your profits are yours to keep.

  3. Investors often view gold as a safe haven asset as it rarely suffers greatly when economies and socio-political systems collapse. Since buying physical gold can be impractical and somewhat expensive, anyone interested in trading gold can do so indirectly by investing in gold stocks.

  4. One of the reasons that gold stocks are popular is because of their volatility. Although this doesn’t appeal to all investors, it’s true that traders only make money when share prices move, unless you’re investing purely for dividend income.

  5. Gold stocks might not be the best starter investments for beginners because their prices can be volatile, and you have to factor in business dynamics as well as the underlying gold price. Beginners and other investors should always diversify by buying several stocks from different industry sectors.

  6. Most online trading platforms let investors trade gold stocks during market trading hours (typically 8 am to 4.30 pm local time) from Monday to Friday.

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