3 Gold Stocks to Invest in as Interest Rates Come Down
Gold has been having a fabulous year, and it has outperformed the stock market. Bullion has jumped 30.1% year to date compared with the 19.5% growth of the S&P 500.
When bonds become less attractive, gold has historically rallied. This is because higher interest rates increase the burden on holding gold as it does not pay a yield. Hence, in an environment where interest rates are coming down and mega-cap growth stocks like tech are looking more lucrative than bonds, the sentiment about investing in gold gets a boost. Gold has been on the upswing in recent weeks after the announcement of the first set of rate cuts by the Fed. It has come very close to breaching the $2700/ounce mark and should continue to rise even further. At the moment, it is priced at $2,686.80.
Central banks, especially in emerging markets, have heavily increased gold purchases to reduce their dependence on the U.S. dollar. These purchases have provided a steady support base for gold, reinforcing its upward momentum throughout the year. For example, China’s central bank went on an 18-month gold-buying spree, ending in May. June and July saw India’s central bank boosting its gold reserves.
In an environment where all the economic indicators and the overhanging fear of a recession are sending the central bank into a possible series of rate cuts, gold stocks are going up. Bullish analysts around the world are predicting that gold may breach the $3000/ounce mark sometime as early as the middle of next year. In this background, gold mining stocks provide much required growth potential. Hence, astute investors should consider such stocks at present.
Our Choices
The stocks below flaunt a Zacks Rank #1 (Strong Buy) or Rank #2 (Buy). The search was also narrowed down with a VGM Score of A or B. Here, V stands for Value, G for Growth and M for Momentum. The score is a weighted combination of these three metrics. Such a score allows you to eliminate the negative aspects of stocks and select winners. You can see the complete list of today’s Zacks #1 Rank stocks here.
Sandstorm Gold Ltd. SAND is a gold royalty company. SAND’s expected earnings growth rate for the next year is 72.2%. The Zacks Consensus Estimate for its current-year earnings has improved 12.5% over the past 60 days. This Zacks Rank #2 company has a VGM Score of B.
IAMGOLD Corporation IAG is an intermediate gold producer and developer in Canada and Burkina Faso. IAG’s expected earnings growth rate for the current year is 444.4%. The Zacks Consensus Estimate for its current-year earnings has improved 48.5% over the past 60 days. This Zacks Rank #1 company has a VGM Score of A.
Newmont Corporation NEM is a producer and explorer of gold. NEM’s expected earnings growth rate for the current year is 83.9%. The Zacks Consensus Estimate for its current-year earnings has improved 7.3% over the past 60 days. This Zacks Rank #2 company has a VGM Score of B.
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Newmont Corporation (NEM) : Free Stock Analysis Report
Iamgold Corporation (IAG) : Free Stock Analysis Report
Sandstorm Gold Ltd (SAND) : Free Stock Analysis Report