Gold has had an incredible run in 2020 and even dating back to 2019. There has been a massive amount of uncertainty in markets, so naturally, a safe-haven asset like gold stocks will see an increase in demand.
This year, however, the economic environment got even more accommodating for gold. With interest rates so low and massive amounts of cash added to the U.S. money supply, the intrinsic value of gold has been rising substantially.
Despite a slight pullback in the precious metal in the last few weeks, there is still a long way to go. And the potential could be improved even further if the second wave of the coronavirus ravages the economy again.
Bank of America even predicted $3,000 gold prices back in April, and the environment for gold has only improved since then.
So, with the recent pullback in gold prices, investors have been handed a massive opportunity. Here are four of the top gold stocks to buy before the rally continues once again.
Warren Buffett gold stock
The first stock you could consider is the TSX stock that Warren Buffett just recently took a stake in, Barrick Gold (TSX:ABX)(NYSE:GOLD). Barrick is one of the biggest gold miners in the world and one of the most popular gold stocks.
If you are betting on an increase in the price of gold, you can’t go wrong owning Barrick. The stock is so large and diversified, it has little execution risk. However, it still offers investors the natural leverage to gold prices, as gold stocks naturally do.
So far, in 2020, with gold up 25%, Barrick’s shares are up roughly 55%. So you can expect some more significant growth, as gold prices rebound and continue their major rally.
Rapidly growing gold stock
If you want even more growth potential, you could consider one of the sector’s top performers over the last few years, Equinox Gold (TSX:EQX). Equinox only commenced production back in 2018, but the stock has already proven to be a top performer.
It’s been ramping up production as well as growing through acquisition, which has naturally increased the price of its shares. However, the fact that it’s growing so fast at a time when gold prices have exploded in value is what’s giving Equinox such impressive returns.
And as the company continues to grow and gets repriced from a junior gold miner to an intermediate (which has less risk), look for the stock to jump once again.
If you are having trouble picking a single gold stock, you could decide to buy an ETF instead, such as the iShares S&P/TSX Global Gold Index ETF (TSX:XGD). The fund tracks shares of several TSX gold stocks. This can be ideal for a few reasons.
It helps minimize risk, because you are exposed to the operations of many gold producers. At the same time, it has little impact on your exposure to these gold stocks.
So, as the precious metal continues to increase in price, you can expect the ETF to follow along.
The last stock to consider is a precious metals streamer such as Wheaton Precious Metals (TSX:WPM)(NYSE:WPM). Owning a streaming company is a different strategy that investors can take, especially if you already own a gold miner.
Wheaton Precious Metals has nearly 20 streaming agreements with operating mines in addition to several agreements with mines in development. This major diversification helps to reduce risk in an already low-risk investment.
Despite it being a low-risk investment, it still offers significant upside. So far, year-to-date gold prices are up about 25%. Meanwhile, Wheaton Precious Metals is up roughly 70%.
As gold prices are rising, gold stocks can offer investors a great way to take advantage. These stocks will offer significant leverage, making them some of the best growth stocks to buy today. Plus, as a safe-haven asset, you can count on them to protect your money.
So, don’t wait too long to buy these stocks, or you could miss out on the growth altogether.
This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium service or advisor. We’re Motley! Questioning an investing thesis — even one of our own — helps us all think critically about investing and make decisions that help us become smarter, happier, and richer, so we sometimes publish articles that may not be in line with recommendations, rankings or other content.
Fool contributor Daniel Da Costa owns shares of EQX.