Intermediate-Term Outlook For Gold Looks Reasonably Bright

By Staff Writer / December 16, 2020 / Article Link

The materials sector .GSPTTMT, which includes precious and base metals miners, added 1.8% as gold futures GCc1 rose 0.9% to $1,844.9 an ounce on Tuesday. The rise comes after a brief correction on Monday that saw gold prices fall as a rollout of the a COVID-19 vaccine in the U.S. and doubts about another round of relief aid out of Congress prompted the precious metal to mark its lowest settlement in almost two weeks.

Gold’s slide comes ahead of the last meeting of the year for the Federal Reserve, which will likely serve as a catalyst for commodities and financial markets in general.

However, institutional investors and investment houses continue to see value in gold mining, expanding their portfolios to include the best gold stocks and a diversified selection of mining stocks. Gold and gold stocks have been powering this year as the Federal Reserve and Congress uncorked a gush of liquidity and fiscal support amid the coronavirus lockdown. They took off again as hopes for a V-shape recovery were splashed by a summer coronavirus wave that lasted through June and most of July. In April, Bank of America put a $3,000-per-ounce 18-month price target on gold. That might require more than a whiff of inflation with no response from the Fed.

Some of the best gold stocks to buy this week include Barrick Gold Corporation (NYSE: GOLD) (TSX: ABX), Golden Independence Mining Corp. (OTCQB: GIDMF) (CSE: IGLD), Newmont Corporation (NYSE: NEM) (TSX: NGT), Osisko Gold Royalties Ltd (NYSE: OR) (TSX: OR), Alamos Gold Inc. (NYSE: AGI) (TSX: AGI).


Barrick Gold Corporation (NYSE: GOLD) (TSX: ABX) and AngloGold Ashanti Limited (NYSE:AU) are two of the most lucrative mining stocks as they recently concluded the sale of their interest in Morila Gold Limited, which owns 80% of the Morila gold mine in Mali, to Firefinch Limited (previously named Mali Lithium Limited) (ASX:FFX) for $28.8 million cash.

One of the more attractive junior gold miners is Alamos Gold Inc. (NYSE: AGI) (TSX: AGI), which recently declared a quarterly dividend of US$0.02 per common share. As announced in October 2020, the Company has increased its quarterly dividend by 33% to an annual rate of US$0.08 per common share. The increase reflects the Company's strong free cash flow outlook following the completion of the lower mine expansion at Young-Davidson in July 2020. The Company has paid dividends for 11 consecutive years during which time it has returned $187 million to shareholders through dividends and share buybacks.


Mining stocks that are looking cheap right now offer a good alternative to buying gold when its price is at an all-time high. Industrial commodities do very well in periods of strong growth — and they will benefit nicely from the projected GDP growth next year — and are expected to continue to grow beyond that. Silver stocks also benefit from the increased demand for solar panels, demand which may go up as the EC, US and Canada ramp up their green initiatives.