3 Gold Stocks To Watch In October 2020
Gold stocks have been somewhat of a hot commodity in the stock market in 2020. The price of gold, for instance, has been increasing steadily this year. And that’s not surprising considering gold has long been regarded as a safe haven in times of market turmoil. With the coronavirus pandemic continuing to wreak havoc in the global economy, investors have been snapping up gold and top gold stocks to hedge against any potential downturn. With gold prices hitting a high of $2,089 in early-August, investors have been looking for top gold stocks to buy.
What makes gold stocks appealing is the current state of the economy. Yes, tech stocks and health care stocks seem to be the most obvious growth drivers of the stock market today. But with the U.S. presidential election just less than 5 weeks away, investors shouldn’t be surprised that more volatility will result in more safe-haven flows. And that would benefit gold the most. With the greenback’s upside under restraint due to a weaker interest rate, that is likely to bode well for the price of gold.
Weakness In The Dollar Continues To Support Gold Prices
Gold usually trades in the opposite direction to the dollar. The 2% rise in the dollar this month has undoubtedly added pressure on gold. However, gold’s upward movement today in prices and signs of progress in negotiations over fresh U.S. stimulus measures are bolstering the yellow metal’s appeal. Spot gold rose 0.52% to $1,897 per ounce as of 3.34 ET. Gold is starting the new month on a positive note after it slumped to it’s biggest monthly drop since late 2016 in September.
The recent correction in gold and gold stocks could provide investors an opportunity to increase their exposure. Considering the Fed is likely to maintain a low-interest-rate environment over the next few years, there’s a great chance that gold is only taking a breather rather than declining continuously. While buying gold may not be the best for those who want quick gains, they are a potent hedge in any portfolio to protect against volatility. With this in mind, here are 3 gold stocks to watch during the coronavirus pandemic.
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The SPDR Gold Trust ETF (GLD Stock Report) has been under pressure over the past few sessions. Although there are plenty of gold bugs out there, the ETF has been struggling to break through the $180 level this month. Investors who want to increase their exposure to gold can buy the GLD ETF, which is very closely tied to the actual price of gold. From a practical perspective, owning GLD is almost as good as holding the yellow metal. As the price of gold hit $2,000 per ounce, GLD shares almost hit $200 per share.
The GLD ETF is down roughly 8.65% from its peak in early August 2020. Despite the recent decline, GLD is still up 23% year to date. Of course, no one can be sure how many more downward movements there are before it reaches a bottom. But many experts believe that the current decline isn’t at all surprising. Many are also increasingly bullish, reiterating that the recent decline in GLD doesn’t mean the bull market is over. Instead, it’s only getting started. Against the backdrop of rampant monetary easing and currency debasement globally, GLD stock will be a safe holding in the long run.
VanEck Vectors Gold Miners ETF (GDX Stock Report) offers investors exposure to some of the largest gold mining stocks in the world, thereby allowing indirect exposure to gold. Investors have been bullish with GDX due to the fact that the Fed was backstopping the financial system with freshly-printed currency. And this has not changed in recent months. In fact, the Fed has since come out and said that it will continue its asset purchases indefinitely. It will also leave interest rates low for a sustained period of time until the job market recovers.
Within the ETF’s portfolio, 56.6% are in Canada-based companies. Other than that, the fund has exposure to companies in the United States, Australia, and South Africa. The largest 3 out of 55 holdings are Newmont Corporation (NEM Stock Report), Barrick Gold Corp (GOLD Stock Report), and Franco-Nevada Corp (FNV Stock Report). Their respective weightings are 11.7%, 11.6%, and 6.2%.
There are numerous benefits to owning GDX stocks over other gold ETFs. Since it is a collection of stocks, it pays a dividend and has a dividend yield of 0.51%. The fund has $16.05 billion assets under management and an expense ratio of 0.52%. If you are a trader looking for a quick flip, bigger percentage gains are important for you. If so, then GDX stock could be your cup of tea. Last Friday, GLD stock fell by 0.28%, but GDX fell 0.7%. You can look at GDX as a way of magnifying your returns from gold. If you are an active trader, look no further.
Alright, I know what you are thinking. This is not a gold stock. The last ETF we have on this list is the iShares Silver Trust (SLV Stock Report). While silver is not as valuable as gold, it will still tag along for the ride. In addition, it also holds value better than currencies that are in the free fall scenarios. While it did not post gains that are of the same level as gold, it still performs better than the equity market this year.
Despite recent declines, iShares Silver Trust has gained 27.76% year to date. Meanwhile, the S&P 500 has gained just 2.1%. This suggests that the iShares Silver Trust is capable of functioning as a safe haven. While silver may not have as much glitter as gold, there is no denying its role as a precious metal. With the effects of the pandemic still playing out and the uncertainties of the presidential election, will you be adding SLV stock to your portfolio?