Gold had a fabulous 2024, outperforming the stock market in general. Bullion jumped more than 27% in the calendar year compared with the 23% growth of the S&P 500. This was the biggest annual jump for gold in 14 years. In fact, the precious metal grew more than 30% in the year before correcting a bit as a fall-out of the U.S. elections.
Historically, gold has rallied when bonds become less attractive. 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 lower and mega-cap growth stocks like tech are looking more lucrative than bonds, gold investment springs up as a major option, and stocks like Gold Royalty Corp. GOLD, New Found Gold Corp. NFGC and Equinox Gold Corp. EQX come into the fray.
On Thursday, Jan. 2, the price of gold jumped more than 1% to around $2,670/ounce, with market expectations of at least a couple more Fed rate cuts and more bullion purchases by foreign central banks.
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 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.
The stocks below flaunt a Zacks Rank #1 (Strong Buy) or Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
Gold Royalty is a royalty company focused on precious metals. GROY’s expected earnings growth rate for the current year is 66.7%. The Zacks Consensus Estimate for its current-year earnings has improved 66.7% over the past 60 days. GROY is a Zacks Rank #1 company.
New Found Gold is a mineral exploration company. NFGC’s expected earnings growth rate for the current year is 42.4%. The Zacks Consensus Estimate for its current-year earnings has improved 17.4% over the past 60 days. NFGC is a Zacks Rank #2 company.
Equinox Gold is a producer and explorer of mineral properties. EQX’s expected earnings growth rate for the current year is 514.3%. The Zacks Consensus Estimate for its current-year earnings has improved 16.2% over the past 60 days. EQX is a Zacks Rank #2 company.
