{"id":1050,"date":"2024-02-14T12:59:22","date_gmt":"2024-02-14T12:59:22","guid":{"rendered":"https:\/\/businesstriumphs.com\/index.php\/2024\/02\/14\/is-now-a-good-time-to-invest-in-gold-stocks-updated-2024\/"},"modified":"2024-02-14T12:59:22","modified_gmt":"2024-02-14T12:59:22","slug":"is-now-a-good-time-to-invest-in-gold-stocks-updated-2024","status":"publish","type":"post","link":"https:\/\/businesstriumphs.com\/index.php\/2024\/02\/14\/is-now-a-good-time-to-invest-in-gold-stocks-updated-2024\/","title":{"rendered":"Is Now a Good Time to Invest in Gold Stocks? (Updated 2024)"},"content":{"rendered":"

Gold ended 2023 well above the coveted US$2,000 per ounce mark and has stayed near that level so far in 2024.<\/strong><\/p>\n

While this rise has excited market watchers, some are disappointed gold stocks haven\u2019t followed suit. Gold equities are generally expected to provide outsized gains compared to the metal, and investors are waiting for a breakout.<\/p>\n

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Why aren\u2019t gold stocks rising? <\/h3>\n

Gold investors and gold companies are understandably frustrated that gold stocks are still lagging. <\/p>\n

\u201cWe\u2019ve had a huge disconnect between gold and the gold stocks really for the last 11 years, but particularly for the last two years it\u2019s been extreme and people don\u2019t understand it,\u201d said Adrian Day of Adrian Day Asset Management. <\/p>\n

In his view, it\u2019s important to understand who has been buying gold during this time and why. For the most part, the \u2018who\u2019 is central banks, and the \u2018why\u2019 is that they want to build long-term defensive positions. <\/p>\n

\u201cI would argue that up until a few months ago it was gold that was out of kilter with the economic reality and not the gold stocks,\u201d Day said. \u201cThe gold stocks were where they should have been. Gold should have been lower, but it was this central bank buying that pushed it up.\u201d He pointed to flat premiums for gold coins and steady outflows from gold exchange-traded funds as further proof that the gold price has been propped up mostly by central banks. <\/p>\n

Willem Middelkoop of the Commodity Discovery Fund also shared his thoughts about the disconnect at VRIC.<\/p>\n

Day echoed this idea: \u201cLet\u2019s not forget, we\u2019ve been through this so many times in the past. Gold stocks can languish for a long time, but when they take off, first of all they take off suddenly, and secondly their returns are dramatic.\u201d<\/p>\n

This optimism brings us to the next question on investors\u2019 minds. <\/p>\n<\/div>\n

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Is now a good time to invest in gold stocks? <\/h3>\n

If the economy is headed into a recession, do investors really want to own gold stocks? According to Day, gold stocks have gained in the majority of the recessions since the 1960s. What he finds most noteworthy is that in the three recessions in which gold stocks were down, they were down by 2 to 5 percent; however, during the recessions in which gold stocks were up, they were up by much wider margins, ranging from 30 percent to upwards of 187 percent.<\/p>\n

\u201cThe other thing that I find very interesting is that the gold stocks outperform the S&P 500 (INDEXSP:.INX) in every recession,\u201d added Day. \u201cIf you expect a recession coming, particularly if you expect a stagflationary period, then you definitely want to have gold, you definitely don\u2019t want to be in the S&P and you probably want to be in gold stocks.\u201d<\/p>\n

Gwen Preston of Resource Maven is looking to the second half of 2024 to really see things start to happen in the gold market, as that\u2019s the point when the US Federal Reserve is expected to pivot toward interest rate cuts. <\/p>\n

Jeff Clark of TheGoldAdvisor.com and Paydirt Prospector agreed that rate cuts from the Fed will be the catalyst to send gold stocks up. Citing the chart work of Sprott\u2019s (TSX:SII,NYSE:SII) John Hathaway, Clark said that in the last three easing cycles, lower interest rates led gold stocks to double, triple or quadruple in value. <\/p>\n<\/div>\n

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The missing puzzle piece for gold stocks <\/h3>\n

So what has to happen to bring the generalist investor back into gold stocks? <\/p>\n

Preston weighed in on which gold stocks will be the first to move in that scenario.<\/p>\n

\u2018When gold breaks through and starts to attract some generalist interest, the stocks that will move first and most will be producers, high-margin or high-grade producers, or producers of scale, because that\u2019s where the big money goes,\u201d she noted. \u201cThe big, advanced assets, such as the mines that are either under construction or reasonably close to construction, those are the stocks that I think will move first when gold breaks up through that range.\u201d<\/p>\n<\/div>\n

\n

Investor takeaway <\/h3>\n

While gold stocks haven\u2019t experienced the same upward movement as gold itself, experts remain optimistic about the sector, with many believing that current gold company valuations present good entry points for investors.<\/p>\n

However, market participants should continue to do their own research before jumping into the sector, and should keep in mind that it may be difficult for gold stocks to gain momentum without interest from generalist investors.<\/p>\n<\/div>\n

Securities Disclosure: I, Melissa Pistilli, hold no direct investment interest in any company mentioned in this article.<\/strong><\/p>\n<\/p>\n

This post appeared first on investingnews.com<\/div>\n","protected":false},"excerpt":{"rendered":"

Gold ended 2023 well above the coveted US$2,000 per ounce mark and has stayed near that level so far in 2024. While this rise has excited market watchers, some are disappointed gold stocks haven\u2019t followed suit. Gold equities are generally expected to provide outsized gains compared to the metal, and investors are waiting for a […]<\/p>\n","protected":false},"author":0,"featured_media":1051,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[3],"tags":[],"class_list":["post-1050","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-investing"],"_links":{"self":[{"href":"https:\/\/businesstriumphs.com\/index.php\/wp-json\/wp\/v2\/posts\/1050","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/businesstriumphs.com\/index.php\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/businesstriumphs.com\/index.php\/wp-json\/wp\/v2\/types\/post"}],"replies":[{"embeddable":true,"href":"https:\/\/businesstriumphs.com\/index.php\/wp-json\/wp\/v2\/comments?post=1050"}],"version-history":[{"count":0,"href":"https:\/\/businesstriumphs.com\/index.php\/wp-json\/wp\/v2\/posts\/1050\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/businesstriumphs.com\/index.php\/wp-json\/wp\/v2\/media\/1051"}],"wp:attachment":[{"href":"https:\/\/businesstriumphs.com\/index.php\/wp-json\/wp\/v2\/media?parent=1050"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/businesstriumphs.com\/index.php\/wp-json\/wp\/v2\/categories?post=1050"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/businesstriumphs.com\/index.php\/wp-json\/wp\/v2\/tags?post=1050"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}