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Coronavirus Scare Pushes Gold Prices Higher: 5 Picks

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Covid-19 has caused nearly 1,868 fatalities and infected more than 72,436 people, as of Feb 17. The spread of the virus has impacted companies having factories in China, as they are constantly facing shortage of workers and crunch in global supply chain. Airlines have temporarily ceased services on major flight routes.

Amid this life-threatening virus scare, investors are rushing to buy safe-havens like gold as companies warn of coronavirus impact on their revenues in the upcoming quarters.

Employee Shortage & Supply Chain Chaos

Per a survey conducted by Shanghai’s American Chamber of Commerce (AmCham), American companies with operations in China are struggling to find workers to operate factories at full potential. Additionally, 48% of the respondents claim that shutdowns have impacted global supply chains, while the rest expect an impact within the next month.

Health restrictions, lockdowns and quarantines make it harder for employees to get back to work after the extended Chinese Lunar New Year holiday. According to the survey, 8 in 10 companies reported lack of adequate staff to run a full production line.

The factories operating at present are facing challenges in supplying employees with protective gears that can prevent the virus from spreading. These include masks, gloves and other health supplies. Another alarming fact is that 30% of the surveyed companies hinted that they may move operations out of China if they are unable to re-open factories soon.

Tech-giant Apple Inc. (AAPL - Free Report) , with a substantial exposure to China, has already warned of coronavirus impact on its revenues. The company has lowered its earnings guidance for the quarter ending March 2020, taking into account production and supply chain disruption and weaker demand in China.

Though Apple’s manufacturing units in China that produce iPhone and other electronics have started reopening, operations are much slower than expected.

Rush for Safe Haven – Gold

The Covid-19 scare is making investors search for and invest in safe haven assets like gold. Gold acts as a hedge for investors during times of geo-political and economic crisis. On Feb 18, spot gold was up 0.3% to $1,586.15 per ounce.  The rush for gold has helped prices of the metal to hit $1,587.30, the highest since Feb 3.

5 Stocks to Buy Now

As gold prices are poised to grow, we have shortlisted five gold miners that carry a Zacks Rank #1 (Strong Buy) or #2 (Buy).

Sandstorm Gold Ltd. (SAND - Free Report) operates as a gold royalty company. The company focuses on acquiring gold and other metal purchase agreements from companies that have advanced stage development projects or operating mines.

The Zacks Consensus Estimate for the company’s current-year earnings has been revised 7.1% upward over the past 60 days.Sandstorm Gold sports a Zacks Rank #1. You can see the complete list of today’s Zacks #1 Rank stocks here.

NovaGold Resources Inc. (NG - Free Report) explores for and develops gold properties in the United States. The company owns Donlin Gold project consisting of 493 mining claims covering an area of 71,420 acres located in the Kuskokwim region of southwestern Alaska. The Zacks Consensus Estimate for the company’s current-year earnings has been revised 27.3% upward over the past 60 days. NovaGold Resources sports a Zacks Rank #1.

Kirkland Lake Gold Ltd. (KL - Free Report) engages in the acquisition, exploration, development, and operation of gold properties.The Zacks Consensus Estimate for the company’s current-year earnings has been revised 1.5% upward over the past 60 days. Kirkland Lake Gold carries a Zacks Rank #2.

Kinross Gold Corporation (KGC - Free Report) engages in the acquisition, exploration, and development of gold properties.The company is also involved in the reclamation of gold mining properties and production and sale of silver. The Zacks Consensus Estimate for the company’s current-year earnings has been revised 7.1% upward over the past 60 days. Kinross Gold carries a Zacks Rank #2.

Sibanye Gold Limited operates as a precious metals mining company. Its products include gold, palladium, platinum, and rhodium and by-products, such as iridium, ruthenium, nickel, copper, and chrome. The Zacks Consensus Estimate for the company’s current-year earnings has been revised more than 100% upward over the past 60 days. Sibanye Gold carries a Zacks Rank #2.

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