Gold holds its value in the long term – that’s the main argument in favour of gold as an investment. Gold also tends to hold its value when the stock market is weak and when there is uncertainty, which is why most conservative investors keep at least some part of their portfolio in gold stocks.
However stable it may be, even gold is not immune to price fluctuations and slumps. This is good news for value investors considering buying good stocks with decent return potential when sufficiently discounted. They could hit their return goals while simultaneously making their portfolio a bit more resilient against weak market conditions.
Right now, gold prices are going down and it has taken a toll on some gold mining stocks and other gold stocks, making them worth considering.
A gold mining stock
Vancouver-based B2Gold (TSX: BTO) is a low-cost, senior gold producer with three production mines – two in Africa and one in Asia. It also has multiple development-stage and exploration projects. The overall portfolio is highly geographically diversified.
The company’s gold production guidance for 2024 is somewhere between 470–500 Koz, and its Canadian project (The Back River Gold District) is on track to start production in 2025.
Apart from the relative stability of the underlying asset itself, another thing that makes B2Gold a moderately safe pick is its ownership structure. Institutional investors hold over 60% of the company, which may provide a decent buffer against fluctuations. Still, the stock is not immune to pressure generated by gold price movements and dipped over 5% in three days following a gold price slump.
If the modest discount is not reason enough to consider this stock, the 5.3% dividend yield might sweeten the deal for investors.
A gold royalties and streaming company
While it’s not a gold mining company and has a completely different and more “sheltered” business model, Franco-Nevada (TSX: FNV) is not completely safe against headwinds and declines in the gold industry.
Even as the largest gold royalties company in the world with the bulk of gold projects in its portfolio in either the development or exploration stage, the stock experienced a dip alongside the gold price in the last few days.
However, the current decline was more of an exception than the norm because, unlike many gold mining stocks in Canada, Franco-Nevada mostly went up in 2024 and is up 15% since the beginning of the year. It’s also an established dividend aristocrat, another reason to consider this stock, though the yield is quite low at 1.1%.
Foolish takeaway
Although it’s difficult to predict whether a long-term bull market is on the horizon for these and other gold stocks, this doesn’t necessarily undermine the two stocks as decent picks. Franco-Nevada has a decent history of long-term growth, while B2Gold offers dividends at a healthy yield, making both viable investments at modestly discounted prices.
