Yahoo Finance Is it the Right Time to Invest in Gold Stocks?
Written by Amy Legate-Wolfe at The Motley Fool Canada
Gold has long been considered a safe haven asset, and it is currently trading at a relatively attractive price. However, inflation and interest rates are stabilizing, which could mean that the gold price might slip. This may also bleed into gold stocks. So today, let’s look at whether now is the time to get in, or out, of gold stocks.
Get into gold
The global economy is facing a number of headwinds, including rising inflation, supply chain disruptions, and the ongoing war in Ukraine. These factors are all contributing to a sense of uncertainty in the markets, which is making gold more attractive as a safe haven asset.
Gold stocks are currently trading at a relatively attractive valuation widely speaking, with many offering dividends as well. Overall, the risks associated with investing in gold stocks are relatively low. The potential rewards, however, are significant.
Get out of gold
But there are other points to consider when looking at gold stocks. For instance, the price has not been stable over the last decade or so. After hitting US$1,900 per ounce back in 2011, it took until August 2020 to hit that price once again. The price has yo-yoed since then, retreating back to US$1,975 as of writing.
Further, the global economy is showing signs of recovery. Therefore, investors are less likely to view gold as a safe haven asset, and they are more likely to invest in other assets, such as stocks and bonds. Add to this that there are other ways to invest in safe haven assets, such as the U.S. dollar.
Consider Barrick stock
An option to consider if you’re looking to invest in gold stocks is Barrick Gold (TSX:ABX), one of the largest gold mining companies in the world. The gold price is currently trading at a relatively attractive level. Therefore, investors who buy Barrick Gold stock now are likely to see their investment appreciate in value in the long term.
Barrick stock also has a strong track record of profitability. The company has been consistently profitable over the past few years, and it is expected to continue to be so in the future. So not only are investors likely to continue seeing returns rise, but dividends increase as well.
The company has mines in all of the major gold-producing regions in the world, including North America, South America, Africa, and Australia. This diversification helps to reduce the company’s risk, and it also gives it access to the best mining opportunities in the world. It’s also investing heavily in new projects, creating more production for the future.
With shares up 12.8% in the last year, but down 12.6% in the last three months, it’s a good time to hop on gold stocks. ABX stock also trades at a valuable 2.9 times sales, and 1.4 times book value. Add in a dividend yield of 2.34%, and Barrick stock looks like a solid investment among gold stocks today. Especially if you’re looking for a short-term investment in a safe haven asset.
The post Is it the Right Time to Invest in Gold Stocks? appeared first on The Motley Fool Canada.
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Fool contributor Amy Legate-Wolfe has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.
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