Spot gold advanced 0.8% to close at $1,755.61 on Jun 22 — the highest closing price since 2012. Gold futures for August delivery rose 0.8% to settle at $1,766.40 an ounce, after touching a high of $1,779 an ounce. This upsurge can be attributed to massive inflows into gold-backed ETFs in the United States. Anticipation of a second wave of coronavirus infections and stimulus measures are also bolstering gold prices.
Per the World Gold Council, there was a massive inflow of Gold ETFs on Jun 19, at 27.3 ton (974,000 ounces). SPDR Gold Shares — the largest physically backed gold exchange traded fund — commanded a major share of the inflows at 23.1 metric tons or 742,492 ounces as the June contract for options expired. The total month-to-date inflows is at 55.6 tons (1.96 million ounces), with the majority originating in North America. During the January-May period, global gold ETFs witnessed record inflows of 623 tons trumping the previous high of 591 tons witnessed in 2009.
Gold is on a Roll This Year
The bullion has gained 15.5% so far this year. Everything seems to be working in favor of gold in 2020, starting with the U.S-Iran tensions, the coronavirus pandemic, strained U.S.-China relations and the civil unrest in the United States.
On the back of the gold-price rally, the Gold Mining industry has gained 22.5% year to date, against the S&P 500’s decline of 3.1%. The industry falls under the broader Basic Material sector, which declined 9.4%.
As governments begin to ease restrictions and reopen their economies, it has triggered worries of a spike in coronavirus cases. With the pandemic showing no signs of dying down any time soon, the uncertainty regarding the impact on the global economy will continue to trigger safe haven demand for gold. The bullion also received a boost from stimulus measures, including the Bank of England adding to its bond buying program and the Federal Reserve signaling rates will remain low.
The pandemic has impacted gold production as miners had to suspend operations in accordance to government mandates. Per the World Gold Council, gold production in the first quarter declined 3% year over year — the steepest decline since first-quarter 2017. Consequently, an impending demand-supply imbalance bodes well for gold prices.
The gold mining industry currently carries a Zacks Industry Rank #72, which places it at the top 28% of 256 Zacks industries. Our research shows that the top 50% of the Zacks-ranked industries outperforms the bottom 50% by a factor of more than 2 to 1.
Using the Zacks Screener we have picked promising gold stocks, which have a combination of a VGM Score of A or B and a Zacks Rank #1 (Strong Buy) or 2 (Buy) and offer solid investment opportunities. You can see the complete list of today’s Zacks #1 Rank stocks here.
4 Promising Gold Miners
AngloGold Ashanti Limited AU: Based in Johannesburg, South Africa, the company currently has a Zacks Rank #2 and a VGM Score of A. The company has a long-term estimated earnings growth rate of 21.9%. The Zacks Consensus Estimate for 2020 earnings indicates year-over-year improvement of 109.9%. The estimate has been revised upward by 4% over the past 60 days.
Barrick Gold Corporation GOLD: Based in Toronto, Canada, this company currently has a Zacks Rank #2 and a VGM Score of B. The Zacks Consensus Estimate for current-year earnings suggests year-over-year growth of 55%. The estimate has moved north by 10% in the past 90 days. The company has a trailing four-quarter positive earnings surprise of 15.4%, on average. The stock has a long-term anticipated earnings growth rate of 2%.
Harmony Gold Mining Company Limited HMY: This Randfontein, South Africa-based company currently has a Zacks Rank #2 and a VGM Score of A. The Zacks Consensus Estimate for current-year earnings suggests year-over-year improvement of 28.6%. The stock has a long-term expected earnings growth rate of 45.8%.
Galiano Gold Inc. GAU: The company was formerly known as Asanko Gold Inc. changed its name to Galiano Gold Inc. in May 2020. Headquartered in Vancouver, Canada, the company currently has a Zacks Rank #1 and a VGM Score of A. The Zacks Consensus Estimate for current-year earnings indicates year-over-year growth of 1100%. The company has a trailing four-quarter positive earnings surprise of 75%, on average. The stock has a long-term anticipated earnings growth rate of 2%.
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Barrick Gold Corporation (GOLD) : Free Stock Analysis Report
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