Gold is surging this year on the back of escalation in U.S.-China trade war, global growth concerns and global easy monetary policies. Notably, the yellow metal topped $1,500 per ounce for the first time since April 2013, bringing its year-to-date gains to over 18%. This is much higher than gains of nearly 15% for the S&P 500.
Trade tensions worsened with Trump’s new tariff of 10% on the remaining $300 billion of Chinese goods and China’s retaliation by allowing its currency yuan to drop to an 11-year low. China also reportedly halted import of U.S. agricultural products. Additionally, Trump branded China as a currency manipulator thereby triggering a currency war. The tit-for-tat situation has raised concerns over global economy, which is already witnessing a slowdown.
The International Monetary Fund (IMF) has recently cut its global growth forecast to 3.2% from 3.3% for this year and to 3.5% from 3.6% for the next, citing further U.S.-China tariffs, U.S. auto tariffs, weaker investment, disruption of global supply chains and severely slow global growth.
Against this backdrop, gold is considered a great store of value and hedge against market turmoil.
The Federal Reserve in its latest meeting cut interest rates by 25 bps to 2-2.5% for the first time since the 2008 financial crisis. This has propelled the yellow metal higher as lower rates will continue to weigh on the dollar against the basket of currencies, raising the yellow metal’s attractiveness given that gold does not pay interest like fixed-income assets.
Additionally, other central banks across the globe are also resorting to easy policies by cutting interest rates or launching stimulus that has boosted the yellow metal.
How to Play?
Given the optimism and intense buying pressure on the yellow metal, gold stocks have been surging this year. Below, we present five such high-flying stocks that will continue to outperform given their solid Zacks Rank #1 (Strong Buy) or 2 (Buy) and double-digit earnings growth. Additionally, these stocks have a VGM Score of B or better. You can see the complete list of today’s Zacks #1 Rank stocks here.
Alamos Gold Inc. (AGI - Free Report)
This Zacks Rank #1 company is engaged in the acquisition, exploration, development and extraction of gold deposits in North America. The stock is up nearly 98.6% so far this year. The strong performance is expected to continue given that it has a VGM Score of B and its earnings are expected to grow 280% this year.
Gold Fields Limited (GFI - Free Report)
This Zacks Rank #2 company operates as a gold producer with reserves and resources in South Africa, Ghana, Australia and Peru. It has surged 72.7% in the year-to-date timeframe and has a VGM Score of A. Gold Fields is expected to post earnings growth of 57.1% for this year.
AngloGold Ashanti Limited (AU - Free Report)
This Zacks Rank #2 company is the third-largest gold mining company in the world, measured by production. It has an estimated earnings growth of 111.3% for this year and has gained 67.3% year to date. The stock has a VGM Score of A.
Harmony Gold Mining Company Limited (HMY - Free Report)
This Zacks Rank #2 company is engaged in exploration, extraction and processing of gold in South Africa and Papua New Guinea. Its earnings are expected to grow a whopping 223.08% for the fiscal year ending June 2020. The stock has gained 65.9% so far and has a top VGM Score of A.
Kinross Gold Corporation (KGC - Free Report)
This Zacks Rank #1 company is engaged in the acquisition, exploration and development of gold properties in the United States, the Russian Federation, Brazil, Chile, Ghana and Mauritania. It has gained 56.2% so far this year and is poised to log impressive earnings growth of 110% for 2019. The stock has a VGM Score of A.
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