Get 40% Off
🤯 This Tech Portfolio is up 29% YTD! Join Now to Get April’s Top PicksGet The Picks – Just 99 USD

Gold Stocks May Shine Amid Banking Storm, Fed Conundrum

Published 22/03/2023, 15:16
Updated 02/09/2020, 07:05
  • As the banking storm wreaked havoc in March, even Warren Buffett's company suffered losses, with six of Buffett's 15 biggest losses being in the financial sector
  • Gold and gold stocks are attractive investment options during this time of economic uncertainty and inflation
  • In addition to gold, Franco-Nevada Corporation and Royal Gold are two gold-related stocks worth considering as potential investments

The current banking crisis has hit even the biggest names in finance, with Warren Buffett's company bearing losses of $12.5 billion. Six of Buffett's 15 biggest losses this year are in the financial sector. In a period of 10 days, from March 6 to 15, the market capitalization of banks fell by 11.5%.

In this challenging situation, it's essential to remain calm and consider potentially exciting markets. And, gold and gold stocks are definitely one of them, considering the yellow metal's appeal as safe haven amid the banking crisis in Europe and the US.

There are several reasons gold could continue to shine this year:

  • In times of economic uncertainty, investors tend to shift from buying stocks to buying gold as a safe haven asset.
  • With inflation higher than usual, investors may also buy gold to protect their capital and minimize the consequent loss of purchasing power due to the rising cost of living.
  • Gold benefits when the dollar weakens due to the inverse relationship between the two assets. If the dollar strengthens, the price of gold tends to suffer, and vice versa.
  • China is the world's largest buyer of gold. As the country's economy recovers, demand for gold will likely increase, potentially driving up its price.

On January 12, when I first discussed the potential benefits of investing in gold, gold futures opened at $1,879.70. Since then, prices have risen to $2,014.90 and climbed above $2,000 for the first time in over a year, increasing by 6.5% in the past week.

However, while you can definitely profit by investing in the yellow metal, there are other ways you can profit from rising gold prices; by investing in gold stocks. Here are two gold-related stocks worth considering:

1. Franco-Nevada Corporation

Franco-Nevada Corporation (NYSE:FNV) was founded by a Canadian who discovered that the best way to make money was through mining royalties, i.e., the right to receive a percentage of a gold mine's production.

FNV Exchange Data and Fair Value

Source: Investing Pro

It is listed on the New York and the Canadian Stock Exchange under the symbol FNV. Over the past 20 years, it has outperformed almost all other investments.

FNV Stock Monthly Price Chart

Its quarterly results are due on May 10, and earnings per share are expected to be $0.84 per share. A break above $150.92 would imply continued bullish strength.

Franco-Nevada Stock Daily Chart

2. Royal Gold

Based in Denver, Royal Gold (NASDAQ:RGLD) was established in 1986 and started as an oil and gas exploration company. In 1987, the company shifted its focus to gold royalties, and it was then that investors started to make large profits.

RGLD Fair Value and Exchange Data

Source: Investing Pro

It is listed on the Nasdaq with the ticker RGLD. It pays a dividend on April 21. And to be entitled to receive it, you must own shares before April 5. It will pay out $0.3750 per share.

Royal Gold Monthly Chart

On May 4, it will report its quarterly results and expected earnings per share of $0.89 per share. A break above $131.43 would imply continued bullish strength.

Royal Gold Daily Chart

Gold's next target would be at $2060-2076, coinciding with significant resistance in that price area. Remember to keep an eye on the gold market in the coming weeks and months, as it may continue to offer opportunities to jump on the bandwagon.

***

Disclosure: The author does not own any of the securities mentioned.

Enroll Here!

Latest comments

Risk Disclosure: Trading in financial instruments and/or cryptocurrencies involves high risks including the risk of losing some, or all, of your investment amount, and may not be suitable for all investors. Prices of cryptocurrencies are extremely volatile and may be affected by external factors such as financial, regulatory or political events. Trading on margin increases the financial risks.
Before deciding to trade in financial instrument or cryptocurrencies you should be fully informed of the risks and costs associated with trading the financial markets, carefully consider your investment objectives, level of experience, and risk appetite, and seek professional advice where needed.
Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. The data and prices on the website are not necessarily provided by any market or exchange, but may be provided by market makers, and so prices may not be accurate and may differ from the actual price at any given market, meaning prices are indicative and not appropriate for trading purposes. Fusion Media and any provider of the data contained in this website will not accept liability for any loss or damage as a result of your trading, or your reliance on the information contained within this website.
It is prohibited to use, store, reproduce, display, modify, transmit or distribute the data contained in this website without the explicit prior written permission of Fusion Media and/or the data provider. All intellectual property rights are reserved by the providers and/or the exchange providing the data contained in this website.
Fusion Media may be compensated by the advertisers that appear on the website, based on your interaction with the advertisements or advertisers.
© 2007-2024 - Fusion Media Limited. All Rights Reserved.