6 Gold Investments to Buy for Limiting COVID-19 Risk

Paul Dykewicz

Six gold investments to buy to protect against the worst of the COVID-19 fallout include four mining stocks, quality coins and Perth Mint certificates backed by the precious metal itself.

These six gold investments to buy offer ways to gain exposure to the appreciation potential of the precious yellow metal, while reining in the risk of miners working near each other amid limited space for social distancing. Two non-equity methods of investing in gold offer minimal risk to COVID-19 for investors who want an alternative to the possibility of a virus outbreak in mining operations around the world that might cause extended shutdowns.

However, the four mining stocks included among the six gold investments to buy have shown that it is possible to respond to instances of COVID-19 among their employees and take action to halt the spread of the disease. Thus far this year, investors in gold have seen their holdings appreciate 12.04%, using the SPDR Gold Shares (NYSE ARCA:GLD) as a proxy, while WTI crude oil spot prices have plunged 66.52%, the Dow Jones Industrial Average dove 16.73%, the iShares Silver Trust slid 13.73%, the S&P 500 fell 11.16% and the NASDAQ Composite nudged up 0.33%.

Chart courtesy of www.YCharts.com

Barrick Gold Is One of 6 Gold Investments to Buy While Trying to Avoid COVID-19   

Toronto-based Barrick Gold Corp. (NYSE: GOLD), the second-largest mining company in the United States, has been recommended in the Five Star Trader advisory service for not quite two months and already is up 40% in that time. Barrick Gold is the top-performing recommendation in the trading service of economist Mark Skousen, PhD, a Presidential Fellow at Chapman University, recipient of the inaugural Triple Crown in Economics in 2018 and one of the 20 most influential living economists.

Barrick Gold reported a 45.5% gain in first-quarter 2020 earnings to reach 16 cents per share. The company’s sales from gold, silver and copper hit $2.7 billion, up 30% from the same quarter a year ago.

Analysts forecast Barrick Gold will grow earnings 69% this year, well ahead of the industry average. Since Five Star Trader recommends call options as well as stocks, Skousen advised the purchase of Sept. 18 $20 calls before choosing to sell them in three segments for a 118.49% gain on half, 213.20% on a quarter and 161.50% on the remainder to average 152.92% in 49 days.

Chart courtesy of www.StockCharts.com

Barrick Gold has more than doubled in price in the past year, beating the 31.85% gain of the SPDR Gold Shares fund, a 13.71% rise in the NASDAQ Composite, a 3.97% climb in the iShares Silver Trust price, a dip of 0.39% in the S&P 500, a drop of 8.39% in the Dow Jones Industrial Average and a 66.80% plummet in oil.

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Chart courtesy of www.YCharts.com

Skousen, who has written his monthly Forecasts & Strategies investment newsletter for the past 40 years, also pointed out that Barrick Gold has $3.3 billion in cash as a financial cushion to back its $5.5 billion in long-term debt. The company last year produced 5.5 million ounces of gold, profit margins above 40% and earnings of $4 billion on revenues of $9.7 billion.

Wall Street has taken notice, with TD Securities raising its rating of Barrick Gold to a “buy” on April 1, when the brokerage set a price target of $28. Another upgrade occurred on March 26 when Deutsche Bank initiated a “buy” on Barrick Gold and gave the stock a price target of $25.

Barrick Gold’s share price quickly topped the target of $20 set on March 17 by ScotiaBank GBM and the $22 target set on March 13 by UBS. Each hike in the price target accompanied a boost of the respective investment firm’s rating on Barrick Gold, which offers a current dividend yield of 1.08%.

B2Gold Is Another of the 6 Gold Investments to Buy in a COVID-19 World

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B2Gold Corporation (NYSE:BTG), a gold mining company headquartered in Vancouver, British Columbia, operates mines in Nicaragua, Namibia, Mali and the Philippines, as well as owns properties for exploration of precious metals. The stock is Skousen’s “speculative” recommendation for 2020, offers a current yield of 0.77% and is up 28.93% so far this year and 95.47% for the past year. 

Chart courtesy of www.StockCharts.com

The mining company boosted its revenues 36% in the past year to $1.2 billion. Also in the last year, the company’s profit margin topped 25% and it earned more than $285 million.

Mark Skousen, a descendant of Benjamin Franklin, meets with Paul Dykewicz in Philadelphia.

B2Gold’s stock price is relatively cheap in the mining sector, selling for less than 10 times expected earnings. The stock has beaten Wall Street expectations four quarters in a row and has amassed $141 million in cash to support its $262 million in long-term debt.

The company announced on May 7 that it had identified 10 positive COVID-19 cases at the Fekola mine site in Mali, including nine workers who were considered asymptomatic. The company’s ongoing COVID-19 testing and response plan has been extended to the mine site and the exploration camp in hopes of preventing spread of the disease to other workers, the local community and the general Malian population.

The company reported that the cases of COVID-19 do not have material impact on operations. The mine continues to operate and both quarterly and annual production guidance remains intact. Management added that B2Gold places the safety and well-being of its workforce as the highest priority, while monitoring public and employee sentiment to ensure that stakeholders are in alignment with the continued operation of the mine.

Kirkland Lake Gold Ranks Among 6 Gold Investments to Buy Despite COVID-19 Risk

Kirkland Lake Gold (NYSE:KL) is facing COVID-19 effects on some of its mining operations and the company withdrew its 2020 guidance on April 1. But it announced on May 6 that it was starting to recall employees who were off work as part of the COVID-19 protocols.

The company’s management added it plans to ramp up business at the affected mining sites gradually, with the timetable determined by ongoing government actions and other developments related to the pandemic. Kirkland Lake Gold announced it did not expect to reach full production levels in second-quarter 2020 and anticipated some impact on production and costs during most of the year.

Kirkland Lake Gold reduced the number of people at its mines by scaling back operations at its Detour Lake site effective March 23 and at Macassa on April 2, while temporarily halting work at its Holt Complex on April 2. Plus, management introduced health and safety protocols including remote work wherever possible, medical screening, enhanced cleaning and hygiene practices, along with social distancing of workers. As part of the health and safety protocols, the company also suspended all non-essential work at and visits to its mines, including exploration drilling and reduced levels of work at a number of projects.

“At the current time, it is not possible to estimate the extent to which the COVID-19 pandemic will impact the company’s business performance in 2020,” according to the announcement. 

Chart courtesy of www.StockCharts.com

The company offers a current yield of 1.22% and is down 9.7% so far in 2020 but is up 20.80% during the past year. Kirkland Lake Gold boosted its first-quarter 2020 revenues to $554.7 million, up 82%, from $304.9 million in Q1 2019 and 35% higher than $412.4 million in Q4 2019. Its net earnings in Q1 2020 reached $202.9 million, or $0.79 per share, jumping 84% from the same quarter last year when they totaled $110.1 million, or $0.52 per share, and 20% above $169.1 million, or $0.81 per share, in Q4 2019.

Newmont Corporation Ranks Among the 6 Gold Investments to Buy

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Newmont Corporation (NYSE: NEM) is another gold mining stock that could be a candidate for investors seeking to gain exposure to precious metals. The stock offers a current yield of 1.06%, while its share price jumped 44.12% so far in 2020 and 109.09% in the past year.

Chart courtesy of www.StockCharts.com

“Gold is an age-old storehouse of wealth,” said Hilary Kramer, host of a national radio program called Millionaire Maker and head of the Value Authority and GameChangers advisory services. “If you’re primarily worried about losing what you have to inflation, a slowing economy or even social upheaval, this is your shield. The question is how you deploy that defensive power. While it is nice to see some mines reopen, costs are going to be high and production will be tentative until the virus is finally under control. That’s a wild card.”

The “whole allure” of gold is that it provides relief from the unknown, Kramer continued. 

The biggest uncertainty right now is when the COVID-19-battered economy will recover.

With roughly 33 million Americans now out of work, the COVID-19 economic crisis has led roughly 21% of all Americans who had a job in February to file for government assistance. In addition, economic contraction in the first quarter is expected to worsen considerably in the second quarter.

Paul Dykewicz interviews money manager Hilary Kramer, whose premium advisory services include 2-Day Trader, Turbo Trader, High Octane Trader and Inner Circle.

Some stocks like NEM are attractive and any uptick in commodity prices feels like a windfall, Kramer said. But gold works best when you are not even open to the possibility of making a lot of money, she added.

“Gold is about hard assets you can trust, and that means physical metal: coins, certificates and so on,” Kramer said. “If you’re worried about COVID-19 fallout, that’s where I’d focus.”

6 Gold Investments to Buy Now Include Coins and Perth Mint Certificates

Bob Carlson, chairman of the Board of Trustees of Virginia’s Fairfax County Employees’ Retirement System with more than $4 billion in assets, said investors worried about fallout from COVID-19 should stay with physical gold or an exchange-traded fund (ETF) that invests in it, such as iShares Gold Trust (NYSE:IAU).

Pension fund Chairman Bob Carlson answers questions from Paul Dykewicz during an interview before social distancing became the norm after the outbreak of COVID-19.

Gold mining company stocks are susceptible to some of the COVID-19 fallout, said Carlson, who also leads the Retirement Watch advisory service. An investor who wants “maximum protection” from negative effects of the pandemic should stay as close to physical gold as possible, he added.

Quality Coins Gain a Spot Among 6 Gold Investments to Buy Now

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A way to obtain gold assets without putting the investment at risk due to COVID-19 is to buy coins. Even though many states have closed most businesses, California considers coin dealers “essential” and allows them to stay open because they hold clients’ money to buy and sell gold and silver, said Van Simmons, who heads David Hall Rare Coins, of Santa Ana, California.

Simmons told me he is recommending the MS63–MS64 $20 Saint Gaudens coins that were struck between 1907 and 1933. In 1986-1987, when the grade MS64 was first created by the Professional Coin Grading Service (PCGS), the price of gold was $275-$300.

“The MS64 $20 Saints were $2,000 a coin,” Simmons said. “Today, they are trading at a small premium over the spot price of gold.”

Van Simmons, of David Hall Rare Coins, said many investors buy gold as an “island of safety.”

Perth Mint Certificates Win a Place with the 6 Gold Investments to Buy

The “best deal” in the precious metals sector is to buy gold in the form of Perth Mint Certificates, said Rich Checkan, president and chief operating officer of Asset Strategies International, a full-service tangible asset dealer in Rockville, Maryland. Investors do not need to wait for the gold to mined and manufactured, with the Perth Mint offering low premiums, he added.

Risk of COVID-19 disrupting the supply is negated since the gold already is in storage at the Perth Mint, Checkan added.

Rich Checkan, of Assets Strategies International, analyzes precious metals pricing.

The number of cases and deaths worldwide due to the virus hit 4,342,354 and 292,833, respectively, on May 12. Also on that date, America’s COVID-19 caseload totaled 1,408,636 with the death toll reaching 83,425. No other country in the world has endured as many cases or deaths due to the virus.

The six gold investments to buy now amid a COVID-19 public health crisis and related economic contraction offer investors a chance for big appreciation if the market drops again, the economy stays depressed and other potential calamities hit. Gold still serves in its centuries-old role as an asset that maintains value in the worst of times.

Paul Dykewicz, www.pauldykewicz.com, is an accomplished, award-winning journalist who has written for Dow Jones, the Wall Street JournalInvestor’s Business DailyUSA Today, the Journal of Commerce, Seeking Alpha, GuruFocus and other publications and websites. Paul is the editor of StockInvestor.com and DividendInvestor.com, a writer for both websites and a columnist. He further is the editorial director of Eagle Financial Publications in Washington, D.C., where he edits monthly investment newsletters, time-sensitive trading alerts, free e-letters and other investment reports. Paul previously served as business editor of Baltimore’s Daily Record newspaper. Paul also is the author of an inspirational book, “Holy Smokes! Golden Guidance from Notre Dame’s Championship Chaplain,” with a foreword by former national championship-winning football coach Lou Holtz. Endorsements for the book come from Joe Montana, Joe Theismann, Ara Parseghian, “Rocket” Ismail, Dick Vitale and others. Follow Paul on Twitter @PaulDykewicz.

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