Given the current market conditions you cannot blame those that have put some money in gold. There are a few reasons you would buy the shiny metal, and most of them revolve around fear and the idea of it being a higher price when you sell.
The fear trade says that people don't trust the cash they have to retain its value. Gold becomes a substitute for the paper currency and people trust it a little more than bitcoin. Maybe they also understand it a little more than the digital currency.
The idea of buying it for a sale at a higher price is another concept. Investors do this all the time, it just becomes harder to justify when you are talking about a metal vs a company that will have future cash flows.
Dig It Up
Recently the miners have started to rise from the dead amid a rally in gold. There are plenty of miners out there, but right now I am going to review just a couple of plays for this move to gold.
Harmony Gold (HMY – Analyst Report) is a Zacks Rank #2 (Buy) with a growth style score of “A” and has a market cap of more than $1B. The company looks for gold in South Africa and Papua New Guinea. Along with exposure to gold they hold a 50% in a mine that is looking for gold and silver… or silver and gold if you are more into that old song. This stock has been on a metoric rise, moving from around fifty cents to more than $2.50 in a few months. That said the $2 handle on this is sure to attract some low priced stock fans.
Richmont Mines (RIC – Snapshot Report) doesn't have the strongest of Zacks Ranks with a #3 (Hold), but at $250M in market cap it has to attract the risk on investors that like aggressive growth. One look at the chart tells me this could be a good play, even with that 25x forward multiple. RIC looks for gold in Canada, and I am not talking about Molson Golden.
Anglogold Ltd (AU – Snapshot Report) has a ticker that only a science major would love. Well I wasn't a science major and I still love it, it is the periodic symbol for Gold. At 18x forward earnings it has a less pricey valuation as compared to RIC, but is at $4.4B in market cap it isn't exactly small either. The stock is a Zacks Rank #2 (Buy).
