Gold prices rose by 26% in 2016 and are scheduled to rise even further. The top gold stocks are though set for even higher gains. In fact, Bill Patalon (Editor of Money Morning) states these prices can even go up by another 47%.
Before taking a look at what Patalon suggest as the best gold stock to buy right now, let’s take a look at why they are climbing and will continue their upward trek:-
Gold marked the best start of the quarter in 2016 with a 16.1% rise. This was the best rise in three decades. As Dow dropped 10% at the start of the year, the S&P plunged to 5.5% in the first two months, closing Q1 2016. It began soaring at the start of 2016.
Investors are increasingly drawn to Gold with growing negative interest rates and lack of confidence in Global Central Banks. According to Bank of America, 13 trillion dollars worth of global debt now has a negative yield.
UK’s decision of June 23 to leave the European Union lead to uncertainties that is set to affect the global market for years to come. It prompted investors to invest further in the safe haven of gold.
Global central banks yet continue to be active Gold buyers. According to Capital Economics, Central Bank Gold demand increased 28% YOY (year over year) from Q1 2016. A key reason for banks to invest in Gold though, is protection against currency volatility.
US Federal Reserve’s, lower for longer interest rate continues to be a key gold price catalyst. The likelihood of a hike though still remains unlikely.
Retail demand for gold is high. Q2 2016 saw a 72% hike in gold coin sales in comparison to a same price period last year.
Gold prices are right now stuck with a two-year high, just when stock markets are logging record closing time. Even bonds are rallying. The trio can actually be seen to be moving in tandem. Yet Patalon states, the most interesting fact is for investors trying to profit from gold— is to actually buy gold stock. It is definitely a better investment option than buying physical gold.
The greatest gainers will though be gold-mining stocks. Patalon suggested stocks are already 79% higher and are expected to see a rise of 130% by end of 2016.
“Of the 28 gold-mining stocks with a market valuation of at least $300 million, every last one is outperforming the S&P 500,” Patalon writes. “What’s more, 20 of the 28 have at least doubled, with 10 of the 28 having tripled in value (or more).”
Yet there is one that stands out. It’s Goldcorp Inc.