Investing in Gold on the Stock Market

July 13, 2020
198 Views

Gold futures broke past $1,800 over the weekend, signaling the strongest confidence seen in the market for almost a decade. In a time of uncertainty where the economy is stumbling and the Coronavirus Pandemic is spreading, gold can offer some security and predictability.

Investors don’t have to buy bullion to get in on gold. ETFs (Exchange Traded Funds) and individual gold mining companies can offer exposure with growth potential.

Why is Gold So Strong Today?

The US dollar is fragile, and some economists have suggested that it may crash this year, especially if the health crisis persists. Investors see gold as a reliable asset during times of currency volatility.

There’s also the fact that the global money supply has been increasing. Inflation is a real concern today. Interest rates in the U.S. are essentially set at zero, and treasury yields are negative.

All of these factors combine to increase the popularity of gold. The stock market has rallied at points this year, often out of step with the reality of the economy. Gold investments could be outliers, and they could create some stability should the market experience any sudden downturn.

Coronavirus cases are increasing in America. Daily infection rates are now higher than they have ever been, suggesting that we haven’t even seen the peak yet. Some governors are calling for lockdowns again, which could bring the economy back to a standstill.

Any investor feeling anxiety about the current conditions can look at opportunities.

Gold Investment Options to Consider

There are several high potential gold stocks and ETFs on the market. The following two picks are both compelling starting points…

  • Kinross Gold Corp (NYSE: KGC): This Canadian gold mining company has active exploration and development projects in Canada, Brazil, Ecuador, Ghana, Russia, Chile, and Mauritania. In the first quarter of this year, the company reported sales growth of 11.9%, contributing to an operating earnings increase of 66.9%. The company has seen no impact from the Coronavirus Pandemic, with all of its projects fully operational. The bargain price and strong growth momentum of the company make this a top stock to watch.
  • SPDR Gold Shares ETF (NYSE: GLD): This ETF is designed to be a cost-effective way to start trading on the bullion market, without actually owning bullion. It is growth-focused and tracks the price. Its price range of $132.13 – $170.86 over the past 52-weeks reinforces its potential to create strong returns for investors who hold the fund long-term.

Exploring gold stocks and funds will reveal new opportunities for diversification. In today’s unprecedented stock market and economy, gold could be the ideal way to bring some positivity to a portfolio.

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