Go for the Gold: 10 Ways to Invest in Precious Metals

Falling interest rates, rising global tensions and strong technical action underlie a renewed sense of bullishness towards gold; several leading MoneyShow.com contributors offer their top picks among mining and precious metals stocks and funds. Adrian Day, Global Analyst Several major gold companies on our recommended list look like good buys now. First up is Newmont Goldcorp , which we acquired following its purchase of holding Goldcorp. The firm released latest results showing solid operations on lower costs. Newmont has issued conservative forecasts on Goldcorp's assets; we anticipate a cut in reported reserves at some of these properties. Goldcorp's mine Penasquito in Mexico remains closed amid a blockade by contractors. With a low geopolitical risk profile, a deep project pipeline, and a strong balance sheet, Newmont could do well in any positive gold environment. We would, however, look for a pullback towards $30 to buy. Osisko Gold Royalties has a reasonable balance sheet, with net debt of $216 million and an investment portfolio valued at quarter end at $404 million (up from $397 million at year end). Though the entire portfolio could not be sold (and is not for sale), it does provide a source of liquidity from time to time. Osisko is also continuing its major share repurchase program, buying 1.7 million shares so far this year. With the stock price down from over $11 for most of this year until this month, it would be reasonable to assume the repurchase program is continuing, and provides some downside protection. Osisko is a buy at this price. Franco-Nevada released strong financials, with earnings above consensus on the back of record metals revenues, boosted by an increase in oil & gas revenues. The results were aided by Candelaria, where operations are now back to normal after a pit wall slide in late 2017 which hurt production over the past year; Stillwater, on the back of strong palladium prices; and Sudbury. With over $1 billion in available liquidity, Franco is in a strong position to make other acquisitions, perhaps helping companies wanting to purchase one or more of the mines expected to be sold by Newmont and Barrick Gold following their major acquisitions (Goldcorp and Randgold respectively). Franco remains our core gold holding. Mike Cintolo, Cabot Top Ten Trader The most important factor for the sector's strength is obviously the price of gold, which last week surpassed $1,400 per ounce for the first time since 2013. But one thing we're seeing in many gold companies is increasing output while costs come steadily down. Agnico Eagle Mines is a well-run operation (production and costs have bested guidance seven straight years). Output has basically stagnated during the past four years. But that's set to change, as the firm has invested heavily in some areas in (very) northern Canada and should begin to reap the benefits going forward (7% production growth this year, 14% in 2020 and 3% in 2021-all likely conservative). And as CapEx declines, all-in costs per ounce should decline a few percent during that time. The result should be solidly rising cash flow. But even before the recent pop, analysts see earnings roaring back in a big way, rising north of 70% both this year and next. It looks like one of the leaders of the sector move. Kirkland Lake Gold looks like a leading gold play, and while it's still pushed and pulled by the action of bullion, the company is doing great thanks to its own expansion plans. This Canadian firm owns five mines around the world, but two -- Fosterville in Australia and Macassa in Toronto -- make up 80% of production, with great cost characteristics at each. And with production costs likely falling after this year and with costs per ounce mined already sinking ($560 per ounce, down 33% from 2018), free cash flow, which is already surging ($93 million in Q1, up 85% from a year ago), could go through the roof. (Kirkland pays a token dividend and has a modest share buyback program in place.) Kirkland is a solid growth-with-cost-containment story. AngloGold Ashanti should be another beneficiary as gold prices potentially get going. AngloGold operates a bunch of mines in South America, Africa and Australia; all told, this year should see the firm mine around 3.3 million ounces of the yellow metal. And it's also busy doing a ton of exploration and development activity, the most promising of which is its Obuasi project in Ghana, which should begin production by year-end and. When it's fully up and running, it will crank out nearly 400,000 ounces annually at a very low cost (sub $800 per ounce). After a rough few years, analysts see earnings bouncing back strongly this year and next, and that could prove conservative if the yellow metal keeps rising. If you want in, look for pullbacks. Gavin Graham, Internet Wealth Builder One way of playing the rise in precious metals that is looking particularly cheap now is the second largest silver miner in the world, Pan American Silver . Silver is selling near a 20-year low in terms of its relationship to gold, at levels which in the past have seen silver outperform gold as the ratio adjusts back to historical norms. In addition, Pan American is down significantly over the last year and year-to-date, largely due to the additional shares issued in its takeover of Tahoe Resources, a deal that many analysts feel has been misunderstood. Vancouver-headquartered Pan American Silver is the world's second largest primary silver miner. The company produced 24.8 million ounces of silver and 179,000 ounces of gold in 2018 at an all-in sustaining cost (AISC) of $10.73 per ounce of silver (figures in U.S. dollars). Silver currently trades at $14.99 per ounce. The company owns a diversified portfolio of assets including properties in such mining-friendly jurisdictions as Mexico, Peru, Canada, Argentina, and Bolivia. Following its takeover of Tahoe, it also owns the Escobal mine in Guatemala that is currently not producing. Pan American is not merely the largest silver company by several measures but a very well managed mining company that has taken advantage of the bear market in precious metals to substantially expand at an attractive price. While some investors have been worried about the suspension of Escobal, Tahoe's only producing silver mine, Pan American structured the deal so that Tahoe shareholders received so-called contingent value rights (CVRs). As such, Pan American will only end up paying for Escobal if it comes back into production. Even without Escobal reopening, Pan American will enjoy strong growth from the Tahoe gold operations and its COSE and Joaquin silver mines in Argentina, which are opening later this year. It also has discovered a major new reserve at depth at its La Colorada mine in Mexico and will have its first reserve estimate later this year. We rate the stock a Buy. Bob Carlson, Retirement Watch I've been urging you to have a gold position in your portfolio for some time. I recommend this position as a hedge against either inflation (now not likely to be a problem anytime soon) and geopolitical crises. We've seen a range of geopolitical issues in 2019. They range from the trade conflicts to political conflicts to potential military conflicts. These events have pushed the price of gold higher. In mid-June, gold reached a 14-month high and neared its five-year peak. I recommend owning gold through iShares Gold Trust . It usually is the lowest cost way to own gold and isn't as widely owned by hedge funds and other short-term traders. Brit Ryle, The Wealth Advisory The GAMCO Global Gold, Natural Resources & Income Trust is a leveraged fund that trades derivatives to generate income, which it then distributes as a very nice dividend. Gold has been the hedge against inflation for hundreds of years. And it has intrinsic value. That's why we'll keep holding onto these shares. As gold prices rise, the prices of the miners producing it will rise, too. And gold has the serious potential to rally over the coming years. Gold has seen a little interest pick up during market uncertainty. That will eventually help our miners rally. As interest keeps growing, they'll keep growing exponentially. Look for the premium to NAV to fall below 0.50%, and you'll get a historically good deal on shares. I rate GAMCO Global Gold, Natural Resources & Income Trust a Buy under $4 a share. It has a current yield of 13% and a net asset value of $4.29 per share. Our 12-month price target is $7.50. Mike Larson, Safe Money Report While the bulls may deny it, the capital markets are speaking loudly and clearly: The U.S. economy is heading into recession in 2020. You simply don't see the Treasury yield curve crashing, short-term rates plummeting, gold exploding, volatility rising, credit risk indicators climbing and defensive stocks dominating offensive ones to this degree unless something serious is afoot. Moreover, the action all fits with my thesis that we began to transition out of a true bull market in January 2018 and in to a totally different market environment. It's one where safety, yield, and recession resistance are valued investment attributes. I recommend that investors buy a 10% position in the SPDR Gold Shares at the market. This ETF owns gold on your behalf. The yellow metal has looked attractive to me since last summer. Now, it appears on the verge of a major breakout -- one driven by rising volatility, recession fears, and a need for chaos insurance among investors. One other thing to keep in mind: While GLD doesn't make dividend or interest payments, its 0% yield beats the negative yield on trillions of dollars of bonds flooding the markets all around the world. That makes it a relatively more attractive investment, which should keep heading higher from here.

Go for the Gold: 10 Ways to Invest in Precious Metals

Top picks among mining and precious metals stocks and funds.

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