Global gold-backed exchange-traded funds (ETF) had a stellar first half, closing with a record net inflow of 734 tons or $39.5 billion, per the World Gold Council. This can primarily be attributed to the coronavirus pandemic, and global uncertainty and the resulting financial-market volatility owing to the same. The performance trumps both the previous highs of annual inflow in tonnage terms (646 tons attained in 2009) and dollar value terms ($23 billion in 2016). Over the first six months of 2020, global gold ETF holdings have surged 27% to reach an all-time high of 3,621 tons. In June, gold ETFs added 104.3 tons (valued at $5.6 billion) — the seventh consecutive month of inflows.
North American Funds Dominate
All regions saw net inflows during the first half of 2020, with North American funds accounting for a major chunk. North American ETFs boosted holdings by 458 tons or $24.9 billion. In North America, SPDR Gold Shares, iShares Gold Trust and Sprott Physical Gold Trust were the top three performers adding 285.6 tons, 95.8 tons and 21.8 tons, respectively. During the period, European-listed funds added 238.5 tons (equivalent to $12.5 billion) while Asian-listed fund holdings rose 22.9 tons or $1.2 billion. Funds listed in Other regions added 14.6 tons or $786.8 million.
Coronavirus Fears to Drive Gold Prices
Gold futures for August delivery settled at $1,809.90 an ounce on Jul 7, after touching a high of $1,810.80 an ounce. Gold prices have gained 18% so far this year. The yellow metal continues to outperform other major asset classes this year as apprehensions regarding the impact of the pandemic on the global economy had investors scurrying for safe-haven assets. Low interest rates, renewed U.S.-China tensions and the civil unrest in the United States also pushed prices north.
This momentum in gold prices is likely to continue in the back half of 2020 with economic and geopolitical environment supporting gold investment demand. Further, ongoing concerns over increasing COVID-19 infection rates in various locations and a likely second wave as economies reopen will fuel gold prices.
On the back of the gold-price rally, the Gold Mining industry has gained 26.9% year to date, against the S&P 500’s decline of 1.1%. The industry falls under the broader Basic Material sector, which declined 5.7%.
The gold mining industry currently carries a Zacks Industry Rank #15, which places it at the top 6% of 256 Zacks industries. Our research shows that the top 50% of the Zacks-ranked industries outperforms the bottom 50% by a factor of more than 2 to 1.
Using the Zacks Screener we have picked five gold stocks, which have a Zacks Rank #1 (Strong Buy) or 2 (Buy) and positive earnings growth expectations for this year. You can see the complete list of today’s Zacks #1 Rank stocks here.
These stocks have also outperformed the industry and the S&P 500 year to date, which has been depicted in the chart below.
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AngloGold Ashanti Limited AU: Based in Johannesburg, South Africa, the company currently has a Zacks Rank #2. The Zacks Consensus Estimate for 2020 earnings indicates year-over-year growth of 65%. The estimates have been revised upward by 3% over the past 60 days. The company has a trailing four-quarter positive earnings surprise of 24.8%, on average. The company has a long-term estimated earnings growth rate of 24.2%.
Galiano Gold Inc. GAU: The company, which was formerly known as Asanko Gold Inc., changed its name to Galiano Gold Inc. in May 2020. Headquartered in Vancouver, Canada, the company currently sports a Zacks Rank #1. The Zacks Consensus Estimate for current-year earnings indicates year-over-year improvement of 1200%. The estimates have been revised upward by 63% over the past 60 days. The company has a trailing four-quarter positive earnings surprise of 75%, on average.
Harmony Gold Mining Company Limited HMY: This Randfontein, South Africa-based company currently carries a Zacks Rank #2. The Zacks Consensus Estimate for current-year earnings suggests year-over-year improvement of 264.3%. The estimate has moved north by 16% in the past 60 days. The stock has a long-term expected earnings growth rate of 45.8%.
AngloGold Ashanti Limited AU: Based in Johannesburg, South Africa, the company currently has a Zacks Rank #2. The company has a long-term estimated earnings growth rate of 22%. The Zacks Consensus Estimate for 2020 earnings indicates year-over-year improvement of 109.9%.
Sandstorm Gold Ltd SAND: Based in Vancouver, Canada, the company currently carries a Zacks Rank #2. The Zacks Consensus Estimate for current-year earnings indicates year-over-year growth of 55.6%. The estimates have moved up 8% over the past 60 days.
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