Investing in Gold can be seen as a safe haven for many when confidence is low in the markets and in the economy. Gold value per ounce is a regular metric being shared globally through daily news alongside your country’s currency and oil prices.
Regardless of your motivation to invest in gold, there are a number of ways to be exposed to gold; from buying gold bullion to investing in gold mining companies to investing in precious metal ETFs. In some cases, you can even have a dividend paying gold mining stocks.
Invest in Gold Dividend Stocks
Founded in 1983 and headquartered in Toronto, Barrick has 10,000 employees, with mining operations and projects in 10 countries.
Under Mr. Munk’s leadership, Barrick grew rapidly, achieving an industry-leading position in just 25 years. His entrepreneurial spirit, combined with conservative fiscal management and strong technical expertise, are core elements of the Company’s original DNA.
More than 75% of Barrick's gold production comes from the Americas region, including Argentina, Canada, Dominican Republic, Peru and the United States. The Company also has mining operations and projects in Australia, Chile, Papua New Guinea, Saudi Arabia and Zambia.
- Opportunity Score: 38%
- Stock: TSE:ABX
- Sector: Basic Materials
- Dividend Yield: 2.37%
- Dividend Payout Ratio: 100.00%
Goldcorp is a leading gold producer focused on responsible mining practices, with production from a portfolio of long-life, high quality assets throughout the Americas, which the Company believes positions it to deliver long-term value.
The Company’s principal producing mining properties are comprised of the Éléonore, Musselwhite, Porcupine and Red Lake mines in Canada; the Peñasquito mine in Mexico; the Cerro Negro mine in Argentina; and the Pueblo Viejo mine (40.0% interest) in the Dominican Republic. The Company's significant projects include the Borden, Century Gold and Coffee projects in Canada, and the NuevaUnión (50% interest) and Norte Abierto (50% interest) projects in Chile.
The Company’s current sources of operating cash flows are primarily from the sale of gold, silver, zinc, copper and lead. Goldcorp's principal product is refined gold bullion sold primarily in the London spot market. In addition to gold, the Company also produces silver, zinc, copper and lead primarily from concentrate produced at the Peñasquito mine, which is sold to third party smelters and refineries.
Goldcorp has an investment-grade credit rating, supported by a strong balance sheet, and remains 100% unhedged to gold sales, providing full exposure to gold prices.
- Opportunity Score: 33%
- Stock: TSE:G
- Sector: Basic Materials
- Dividend Yield: 0.77%
- Dividend Payout Ratio: 117.84%
Franco-Nevada is the leading gold-focused royalty and stream company by both gold revenue and number of gold assets. The Company has the largest and most diversified portfolio of royalties and streams by commodity, geography, revenue type and stage of project. The portfolio is actively managed with the aim to maintain over 80% of revenue from precious metals (gold, silver & PGM).
The Company does not operate mines, develop projects or conduct exploration. Franco-Nevada’s business model is focused on managing and growing its portfolio of royalties and streams.
- Opportunity Score: 49%
- Stock: TSE:FNV
- Sector: Basic Materials
- Dividend Yield: 1.39%
- Dividend Payout Ratio: 110.66%
Agnico Eagle Mines
Agnico Eagle is a senior Canadian gold mining company that has produced precious metals since 1957. Its eight mines are located in Canada, Finland and Mexico, with exploration and development activities in each of these countries as well as in the United States and Sweden. The Company and its shareholders have full exposure to gold prices due to its long-standing policy of no forward gold sales. Agnico Eagle has declared a cash dividend every year since 1983.
- Opportunity Score: 37%
- Stock: TSE:AEM
- Sector: Basic Materials
- Dividend Yield: 1.13%
- Dividend Payout Ratio: 129.62%
Invest in Gold ETFs
Above is just a few of the gold producing companies out of many. Barrick, Franco-Nevada and Goldcorp are really the top three major dividend paying stocks if you want to invest in individual stocks.
If you are just getting started with gold, it might be easier to just get a gold ETF and buy a little bit of the many gold producers through an ETF. XGD from iShare tracks the S&P/TSX Global Gold Index Fund and contains 59 holdings. The index is down 26% from a year ago, down 3% from 5 years ago and up 105% from 10 years ago. The rule of 7 says you should double every 7 years with a 10% compound growth. Doubling your money in 10 years is not that bad but you obviously need to have a good stomach for the ride.
Invest in Gold Bullion
If you want to own gold as is, then the bullion is for you. Investing in gold bullion is similar to buying currency in a way. You buy it at a certain price and hold it until you want to sell. Gold prices fluctuate over time and it’s rated by the ounce.
To buy gold bullion, you can always use the Canadian Mint. There is a lot of information for buying, storing and trading precious metals with the Canadian Mint.
Sector classification is driven by a set of standards across North America, stock market and indexes. There is a specific company classification referred to as NAICS (North American Industry Classification System) managing a set of classifications. Statistic Canada is also a partner with defining the NAICS with company counts for different classifications.
While the company classification is critical to understand the evolution of industries, it is by far too detailed to manage for investors and all companies can be grouped under a sector. The best visual tree I could find is under Wikipedia's Global Industry Classification Standard.
|Basic Material||Chemicals, Construction Materials, Containers & Packaging, Metals & Mining, Paper & Forest Products|
|Communication Services||Diversified Telecommunication Services, Wireless Telecommunication Services|
|Consumer Cyclical||Auto Components, Automobiles, Household Durables, Leisure Products, Textiles, Apparel & Luxury Goods, Hotels, Restaurants & Leisure, Diversified Consumer Services, Media, Distributors, Internet & Direct Marketing Retail, Multiline Retail, Specialty Retail|
|US Consumer Defensive Sector||Food & Staples Retailing, Beverages, Food Products, Tobacco, Household Products, Personal Products|
|Canadian Energy||Energy Equipment & Services, Oil, Gas & Consumable Fuels|
|Financial Services||Banks, Thrifts & Mortgage Finance, Diversified Financial Services, Consumer Finance, Capital Markets, Mortgage Real Estate Investment Trusts (REITs), Insurance|
|US Healthcare||Health Care Equipment & Supplies, Health Care Providers & Services, Health Care Technology, Biotechnology, Pharmaceuticals, Life Sciences Tools & Services|
|US Industrial Sector||Aerospace & Defense, Building Products, Construction & Engineering, Electrical Equipment, Industrial Conglomerates, Machinery, Trading Companies & Distributors, Commercial Services & Supplies, Professional Services, Air Freight & Logistics, Airlines, Marine, Road & Rail, Transportation Infrastructure|
|Canadian Real Estate||Equity Real Estate Investment Trusts (REITs), Real Estate Management & Development|
|US Technologies||Internet Software & Services, IT Services, Software, Communications Equipment, Technology Hardware, Storage & Peripherals, Electronic Equipment, Instruments & Components, Semiconductors & Semiconductor Equipment|
|Utilities||Electric Utilities, Gas Utilities, Multi-Utilities, Water Utilities, Independent Power and Renewable Electricity Producers|
DISCLOSURE: Please note that I may have a position in one or many of the holdings listed. For a complete list of my holdings, please see my Dividend Portfolio.