The price of gold has taken off in recent months, with many investors rushing over to the local Costco to buy gold bars. Undoubtedly, it was a good move by Costco to start selling physical bullion in the face of one of the biggest demand surges in quite a while.
With the weak Canadian dollar that may stand to fall further, as the Bank of Canada (BoC) potentially looks to consider taking a slightly more dovish tone that the U.S. Federal Reserve (Canada seems to have just a bit more room to move forward with rate cuts than the U.S. after the latest consumer price index data, at least in my opinion), perhaps going for gold (miners) isn’t so bad of an idea, after all.
Even with the recent momentum hitting the gold scene, I still think investors have plenty to love as the gold bugs finally have their day in the spotlight.
So, could gold bullion shine further as we head further into the second quarter? And is it a better idea to go after the dirt-cheap miners for a shot at extending one’s value and potential upside for the year ahead?
Where do gold prices go from here? How can value investors play the precious metal?
First, it’s impossible to tell where commodities like gold or silver will be headed next in the near term. By nature, gold is a speculative asset, but it’s a proven store of wealth over the course of centuries. Though I’m a bigger fan of precious metals over cryptocurrencies, I’m not so sure I’d go for physical bullion at the local Costco, even if you can grab a bar for around the spot price.
Sure, gold may be a safer store of wealth for when the stock market gets rocked. That said, if it continues its run, I view the miners as a better way to play the great gold bull run of 2024. Further, I view many of the top-tier gold miners as pretty undervalued, given many of them are still trading down considerably from their all-time highs.
The way I see it, gold plays stand to gain a great deal as the surge continues. And if gold plunges? The mining stocks can also take a nosedive. But at the very least, the best ones pay dividends and may have the means to march higher as production costs continue to fall with every smart operating efficiency-driving move.
Barrick Gold: Still the gold standard!
At this juncture, Barrick Gold (TSX: ABX) shines as a gold miner to bet on if you’re looking to expose your portfolio, whether it be a Tax-Free Savings Account or Registered Retirement Savings Plan, to the shiny metal. Though I’m a fan of management and their ability to further improve operating economics, I must say the main draw has to be the 2.2% dividend yield.
Indeed, ABX stock sports a pretty generous payout, fit for passive-income seekers. And though it may be less secure if gold prices were to crash, I’d argue that it also has room to grow if they continue surging higher from here. Either way, those comfortable with volatility, I believe, can do better than bullion at these levels. With shares down around 38% from all-time highs of 2020, I’d also argue there’s ample upside to be had as gold continues glittering for safe-haven-seeking investors.
