With more and more economists talking about the dreaded R-word — recession — along with the weakening housing market and record consumer indebtedness, investors are right to be concerned. But we should not use this as a reason to be scared of investing.
Over the long term, we have seen time and time again that markets rise and that remaining invested is the right choice. But we need to adjust the composition of our portfolios at this time.
I have been suggesting that investors look for more defensive stocks for some time now, and at this time, as recession fears may be slowly coming to fruition, it is not too late to make this switch.
Here are two gold stocks that can help investors continue to make money, even in difficult economic times, because gold has traditionally been a safe have in difficult economic and geopolitical times, and these days the difficulties seem to be mounting.
With interest rates seemingly not heading higher anytime soon, we have a perfect storm for gold prices and gold stocks.
In late 2011, gold prices peaked at close to $1,900 per ounce, then retreated steadily to levels of just over $1,000 per ounce at the end of 2015. The price of gold is currently $1,308 per ounce.
Gold companies have worked hard to reduce costs and improve balance sheets, which leaves them well positioned to reap the rewards of rising gold prices.
So, if you believe gold prices will continue to rally, here are two gold stocks to consider.
Agnico-Eagle Mines (TSX:AEM)(NYSE:AEM)
$13.6 billion Agnico-Eagle has the lowest political risk profile of its peer group, with gold mines in politically safe areas such as northwestern Quebec, northern Mexico, Finland, and Nunavut, and it has exploration activities in Canada, Europe, Latin America, and the United States.
The company has been a consistent top performer, with solid operational performance and an industry-leading cost structure, which has driven consistently better-than-expected results.
2018 results came in above expectations, the dividend was increased 14%, and production guidance was increased.
With a 70% five-year return and a 1.13% dividend yield, Agnico stock continues to be a reliable stock for wealth creation.
Kirkland Lake Gold (TSX:KL)(NYSE:KL)
Rising from obscurity five years ago and returning 1,800% in the process, $9.2 billion Kirkland Lake Gold is achieving production and financial momentum, as it has surpassed 2018 production targets and achieved better-than-expected EPS and cash flow numbers.
With mines in Canada and Australia, Kirkland also represents a lower-risk way to play the gold space.
This is a high-quality stock that has shown operational excellence and that can be expected to continue to see strong production growth, decreasing costs, and a rising dividend.
When you buy heavily cyclical stocks at low prices… and then hold the shares until the cycle reaches its peak… you can make a very healthy profit.
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Fool contributor Karen Thomas has no position in any of the stocks mentioned.