With the first full month of summer under way, it’s not only the days that are growing warmer. The gold market is also heating up. On the first day of July, August gold futures flirted with the $1,800 threshold, crossing it briefly and then falling. Nonetheless, it was the highest price gold futures had reached since August 2011.
Between COVID-19 cases rising in several areas throughout the U.S. and geopolitical tensions remaining high, it’s clear that investors are motivated to maintain exposure to gold as a hedge against overall market volatility. Investors, therefore, may find themselves motivated to add some gold exposure to their portfolios. And it just so happens that there are some compelling opportunities right now: stocks like Equinox Gold (NYSEMKT:EQX), Franco-Nevada (NYSE:FNV), and Newmont Goldcorp (NYSE:NEM).
Equinox Gold may not have been one of the more recognizable names among gold investors, but having completed a merger with Leagold Mining in March, it certainly deserves some attention now. In addition to operating six mines throughout the Americas, the company also has four projects in development.
For 2020, management is targeting gold production of 540,000 ounces to 600,000 ounces, but the company imagines this will grow significantly, targeting annual gold production (though it hasn’t provided a time frame) of 1 million ounces. With proven and probable gold reserves of 12.2 million ounces and measured and indicated resources of 21.9 million ounces, the company seems capable of achieving this target through organic growth.
Forecasting 2020 all-in sustaining costs of about $1,030 per ounce, Equinox Gold has the potential to generate a strong margin this year with gold averaging $1,646 per ounce year to date. But what is especially alluring about the company is the amount of skin that management has in the game. Insiders own about 9% of the company, a considerable amount compared with most of its peers; consequently, investors can rest assured that management is motivated to grow shareholder value.
Swim with the stream
For gold-seeking investors who are not interested in the individual companies digging the metal out of the ground, Franco-Nevada is an ideal choice. A royalty and streaming company, Franco-Nevada operates more like a banker than a miner, providing up-front capital to mining companies. In exchange, Franco-Nevada retains the rights to purchase a certain amount of gold (or other metal) at a pre-set discounted price, or to receive a percentage of mineral production from a mine.
Franco-Nevada’s exposure to gold is considerable. Partnering with some of the world’s leading mining companies, it has a portfolio of gold and gold-equivalent projects…