The first quarter of 2020 is over, and like most metals gold has had an interesting ride.
Trading within a broad spread of over US$200 during the period, the yellow metal has been impacted by diverse headwinds and tailwinds, with the COVID-19 outbreak of course being a key factor.
In a note released at the end of Q1, analysts at Raymond James shared their new 2020 gold forecast, saying that they expect the precious metal to average US$1,594 per ounce for the year. That breaks down to US$1,700 in Q2, US$1,650 in Q3 and US$1,600 in Q4.
The firm updated its outlook in light of COVID-19, and currently favors precious metals over base metals and bulk commodities. That’s because it believes precious metals should benefit first from lower interest rates, and should be less affected by demand decreases caused by the coronavirus.
For those looking for gold stocks to buy, Raymond James also shared a list of the gold-focused companies it believes have the potential to do well in the current environment.
Raymond James’ preference is for companies with higher trading liquidity and higher operational diversification. Its thinking is that companies with varied asset bases will be more protected as countries around the world continue to take steps to stop the spread of COVID-19.
Read on to learn which four gold-mining companies the analysts chose for their gold stocks list. For investors looking to invest in gold and decide which gold stocks to buy, this may be a good place to start. All stats were current as of April 6, 2020.
1. Agnico Eagle Mines (TSX:AEM,NYSE:AEM)
Current share price: C$64.50; US$45.61
Precious metals miner Agnico Eagle Mines has been in production since 1957, and has mining operations in Canada, Finland and Mexico. It also explores in all of those countries, as well as the US and Sweden. Its 2020 gold production guidance was set at 1.875 million ounces, although it’s possible it will be reevaluated due to COVID-19 developments.
2. Barrick Gold (TSX:ABX,NYSE:GOLD)
Current share price: C$29.06; US$20.55
With gold and copper mines and projects in 13 countries in North and South America, Barrick Gold is a giant in the gold space. After merging with Randgold Resources last year, its 2020 production guidance stands at 4.8 million to 5.2 million ounces of gold and 440 million to 500 million pounds of copper.
Again, like most companies, Barrick has been affected by the coronavirus outbreak, although only mildly so far. At the time of this writing, it had issued several press releases on its COVID-19 precautions, but had not shut down any of its mines.
3. Kinross Gold (TSX:K,NYSE:KGC)
Current share price:C$7.18; US$5.09
Founded in 1993, gold powerhouse Kinross Gold has mines and projects in the US, Brazil, Chile, Ghana, Mauritania and Russia. Its guidance for 2020 is set at 2.4 million gold equivalent ounces.
The company has communicated twice with investors about its response to the coronavirus, but none of its mines had been impacted at the time of this writing. As a precautionary measure, it drew down US$750 million from its US$1.5 billion revolving credit facility on March 20; when explaining the move, Kinross noted that it is in a strong financial position and does not currently intend to use the money. It does expect slightly lower gold sales in Q1 due to the outbreak.
4. Newmont (TSX:NGT,NYSE:NEM)
Current share price: C$70.38; US$50.11
Newmont describes itself as the world’s leading gold company, as well as a producer of copper, silver, zinc and lead. Founded in 1921, it has operations North America, South America, Australia and Africa.
The company’s attributable gold production guidance for this year was set at 6.4 million ounces, but it has withdrawn that amount due to COVID-19. It has had to ramp down mines in Peru, Quebec, Argentina and Mexico. Newmont hasn’t yet shared new guidance for 2020.
Royalty and streaming stocks
It’s also worth noting that Raymond James is interested in royalty and streaming companies, which it said tend to have diverse operations by nature. It named Franco-Nevada (TSX:FNV,NYSE:FNV) and Wheaton Precious Metals (TSX:WPM,NYSE:WPM) as its picks in that arena.
For more on those stocks, watch the Investing News Network’s recent interviews with Paul Brink, president and COO of Franco-Nevada, and Randy Smallwood, president and CEO of Wheaton Precious.
For other possible gold companies to invest in, check out our lists of the TSX– and TSXV-listed gold stocks that are up the most year-to-date.
You may also want to consider investing in physical gold or gold exchange-traded funds (ETFs). Click here to find out about investing in physical gold and click here for an overview of gold ETFs.
Want even more details? Read these articles for more INNdepth coverage:
- Gold Stocks and Gold Production: A Beginner’s Guide
- An Overview of Gold Stocks and Price
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Securities Disclosure: I, Charlotte McLeood, hold no direct investment interest in any company mentioned in this article.