As the 1st quarter of 2022 comes to a close, the world is struggling to move forward following the COVID-19 pandemic and is now watching the war in Ukraine claim thousands of lives and further disrupt global energy markets.
As a result, the financial markets are off to one of the most volatile starts to a new year, making these three leading gold stocks a strong bet during these uncertain times.
During times of volatility, investors have sought safer, more predictable investments like bonds and mutual funds. Historically, the most popular hedge against volatility has been gold, which still appears to be the case today. Below are three companies, each with their unique attributes, allowing investors to invest in the world’s most popular precious metal.
Owner of perhaps the most desirable ticker on the market, Barrick Gold is the world’s second-largest producer of gold, with an estimated 4.84 million ounces of gold produced in 2021 (the world’s largest producer, Newmont, produced 5.88 million ounces).
Barrick Gold, which has operations in 13 countries, has been very active on the M&A front over the last few years. In 2018, the company merged with Randgold Resources, which operates gold mines in Mali. Then in 2019, Barrick formed a joint venture with Newmont (NYSE: NEM) (TSX: NGT) called Nevada Gold Mines, merging the two companies’ Nevada mines into a single entity, creating synergies for both.
Shares of Barrick Gold closed trading today at $31.05 per share, down -0.51% on the day. YTD GOLD stock is up +30.41%.
Based in South Africa, with additional mines in Australia, Ghana and Peru, Gold Fields is the world’s sixth-largest producer of gold. Rather than expand into other countries, the company has chosen to go deeper into its existing territories, whether through internally-developed mines or local acquisitions.
Gold Fields has weathered the pandemic reasonably well, with 2021 adjusted free cash flow from operations growing 5% to $913 million, while net income increased 6% to $929 million. All this while retiring $100 million in debt and lowering their debt to adjusted EBITDA ratio to 0.4.
Shares of Gold Fields closed trading today at $14.96 per share, down -7.2% on the day. YTD GFI stock is up +41%.
While the other two companies on this list own and operate gold mines directly, Wheaton Precious Metals does not own nor operate any mines. Instead, they operate on a “streaming” model, whereby they invest upfront with a partner mine (mostly silver and gold mines) with the agreement of buying their product at a discounted price in the future. This unique business model provides the company with a steady stream of precious metals at more predictable and lower prices while providing mines with the upfront funding needed to get operations started.
2021 was a banner year for the company on financial terms, setting records for revenue ($1.2 billion), operating cash flow ($845 million) and adjusted net earnings ($592 million) while producing more than 750,000 ounces of gold.
Shares of Wheaton Precious Metals closed trading today at $61 per share, down -0.21% on the day. YTD WPM stock is up +15.05%.
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Disclaimer: Wealthy VC holds does not hold a position in any of the stocks mentioned in this article.