Going for Gold: The Best Gold Stocks to Invest in

Going for Gold: The Best Gold Stocks to Invest in

Gold isn't a one-size-fits-all investment, so finding the right gold stock to invest in will take some panning.

Going for Gold: The Best Gold Stocks to Invest in
Guy Ovadia

Published Mar 15, 2022Updated Mar 15, 2022

Commodities & Gold

Commodities & Gold

Stock Trading

Stock Trading

Balanced Investing

Balanced Investing

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Investors tend to keep their eyes on gold during times of economic uncertainty, so there's no question as to why gold stock prices are on the up. Gold stocks can be an easy way to add exposure to gold into your portfolio while maintaining relative liquidity. However, not all gold stocks are the same—the price of some gold stocks can deviate from the gold spot price. If you're looking for the best gold stocks to invest in, here's everything you need to know.

What are gold stocks?

Gold ETFs are a convenient way for investors to make smaller investments into gold since they're structured to already include associated costs like storage and maintenance.

Generally, gold stocks are any publicly traded security backed by physical gold or by gold-related assets. The most straightforward type of gold stock is a gold exchange-traded fund (ETF), which gives investors exposure to gold as an underlying asset. ETFs don't translate into ownership of the underlying asset, but rather serve as an instrument for investors to buy and sell gold without dealing with it physically.

While most gold ETF shares represent a portfolio of physically secured gold, ETFs can also trade other gold-related assets like futures contracts and stocks in mining companies. Gold derivative ETFs that deal with gold futures are riskier because they're more impacted by volatility and price speculation. Conversely, investors can also add gold as a commodity to their portfolio by buying shares in either a gold mining company or a diversified mining ETF.

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Top 7 gold stocks

Investors should carefully consider the different ways to invest in gold because no two gold stocks are exactly alike. For example, gold ETFs can be backed by physical gold or derived from a diversified portfolio of gold-related assets like stocks in mining companies and gold futures. Before investing in gold stock, it's important to measure risk by identifying whether a share represents gold as an underlying asset or if it's a derivative that could diverge from the spot price of gold.

Types of Gold Stocks

  • Gold ETF: investing in a fund that deals with gold as an underlying asset
  • Gold mining stock: investing in companies that extract gold
  • Gold derivative ETF: investing in gold futures or several gold-related assets
  • Alternative investment platforms: investing directly in non-publicly traded gold

Barrick Gold (GOLD)

One of the best ways to invest in gold is by buying stock in a mining company and Barrick Gold (GOLD) is one of the best there is. The Barrick Gold Corporation focuses on the extraction of gold and copper from large-scale mines across North and South America as well as Africa. Barrick is one of the most consistently profitable mining stocks focused on predominantly gold-related activities like exploration, mine development, and extraction. 

Barrick aims to make the extraction process more cost-efficient to keep their mines profitable even if the price of gold rises. Considering its extensive mining portfolio and strong balance sheet, it's feasible for Barrick to achieve its goal of $800 per ounce by 2025. Barrick aims to sustain their profits regardless of the price of gold, thus making it one of the best stocks for investors looking for exposure to gold as a commodity.

Vale SA (VALE)

Investors who want exposure to gold as a commodity but desire stock in a more diversified mining company should have a look at Vale. Vale is the most traded public mining company in the world and their business focuses on three subsectors: ferrous metals, base metals, and coal. While only a small portion of Vale is focused on the extraction of gold, its logistics network makes it one of the world's most influential mining firms.

Vale's logistics arm controls an extensive transportation infrastructure spanning across South America, East Africa, the Middle East, Oceania, and Asia that connects mines to a global network of ships, ports, and railroads. As one of the top third-party carriers of cargo like unrefined ore and precious metals, Vale is positioned as a key actor in the gold supply chain. An investment in Vale could be a great part of a comprehensive portfolio of gold-related assets.

VanEck Vectors Gold Miners ETF (GDX)

Gold ETFs are a convenient way for investors to gain exposure to a diversified portfolio of gold and precious metals mining stocks. VanEck Vectors Gold Miners (GDX) is a gold mining ETF derived from stocks in the top companies engaged in mining and other gold-related activities. GDX aims to replicate the price performance of the AMEX Gold Miners Index (GDM), minus fees and expenses, while providing more liquidity than other gold mining ETFs.

GDX is the easiest way to add gold mining to your portfolio without having to buy stock in individual mining companies. While GDX is great for spreading risk across multiple mining ventures, gold mining ETFs like GDX are less correlated with the price of gold because they don't deal with physical gold directly. Although GDX is great for investors who are bullish on gold as a commodity, investors looking for a store of value investment will prefer ETFs where gold is the underlying asset.

SPDR Gold MiniShares Trust (GLDM)

ETFs are the best option for investors looking for direct exposure to gold as an asset, and State Street Global Advisors offers some of the top gold ETFs. First up is their SPDR Gold Shares ETF (GLD) which was designed to give retail investors cost-effective access to the gold bullion market. GLD is the largest physically-backed gold ETF in the U.S., but competition from lower-cost alternatives has led State Street to create a cheaper low-fee version of GLD called SPDR Gold MiniShares Trust (GLDM).

GLDM has one of the lowest expense ratios of any physically gold-backed ETF, making it a more convenient and effective way to invest in gold than any of its predecessors or competitors. GLDM is cheap and cost-efficient because each share of GLDM represents only one-hundredth of an ounce of gold and the annual fee is less than half that of GLD. GLDM is the best ETF for frugal investors looking to gain direct exposure to gold while minimizing associated costs.

iShares Gold Trust (IAU)

iShares Gold Trust (IAU) is one of the longest-running reliable gold trusts. IAU is popular among retail investors because its relatively low expense ratio has historically kept its price closer to that of gold compared to competing ETFs. IAU is not an actively managed fund, which means administrative costs associated with pursuing arbitrage opportunities are eliminated. 

IAU's simple structure allows it to adhere more closely to the spot price of gold than most other ETFs. One caveat to this is that the price of IAU shares is determined using the LBMA gold price of the day or most recent trading day, which could lead to discrepancies since the underlying assets are held in London. While timezone differences could pose short-term issues, investors looking for a convenient way to gain exposure to physical gold may be satisfied with iShares Gold Trust in their portfolio.

ProShares Ultra Gold (UGL)

Investors looking for a bullish investment in gold may want to consider leveraged exposure ETFs like ProShares Ultra Gold (UGL). UGL deals in gold futures as a way to provide investors double the daily performance of gold according to Bloomberg's Gold Subindex. In other words, investing in UGL can serve as an instrument to speculate on short-term spikes in the spot price of gold. 

Investors can add UGL to their portfolio to capitalize on an immediate upward movement of the price of gold, but it doesn't come without risk. UGL is derived from futures contracts, which are leveraged positions that are essentially a gamble on the price of gold going up. Because UGL is a leveraged position, its price per share will move twice as much as the normal price of gold, which means potentially higher gains or lower losses. Risks notwithstanding, investors looking to make a short-term bet on the price of gold going up should consider buying UGL.

Direxion Daily Junior Gold Miners Index Bull 2X Shares (JNUG)

If you're looking to gamble on gold as a commodity rather than as an asset, then perhaps you should consider a leveraged exposure mining ETF like Direxion Daily Junior Gold Miners Index Bull 2X Shares (JNUG). JNUG provides double exposure to the MVIS Global Junior Gold Miners Index, updated daily, which is an index comprising of small-cap global mining companies that derive at least 50% of their revenue from gold or silver-related activities. 

Like other leveraged positions, it's not recommended to hold JNUG over the long term because it better serves as an instrument for short-term speculation on the precious metals mining market. JNUG is a great way for investors to bet on the growth of small gold mining companies, but those looking to bet against them could consider its sister fund JDST. JDST provides negative exposure to the same index, which means JDST and JNUG will always move opposite each other. Investors looking to make near-term calls on gold as a commodity should explore these opportunities.

Investing directly in gold

Investing in gold is a great way to hedge against the stock and profit from inflation, but what if investing in gold as a stock, derivative, or underlying asset isn't good enough? Well, you can have your cake secured in a vault in a different country and eat it too with alternative platforms that let you invest directly in gold. Precious metal investing platforms like OneGold, Vaulted, and Glint have made investing directly in gold easier than ever.

Vaulted

If you're looking for the real McCoy, then say hello to Vaulted, an alternative investment platform that will "democratize access [to] gold for the little guy" according to CEO David McAlvany. That's right, Vaulted lets investors add precious metals like gold, silver, and platinum to their portfolios. Investors can use Vaulted to buy and sell fine gold bullions backed by the Royal Canadian Mint and Vaulted assigns them a serial number with corresponding bullion which never leaves the vault unless they request to have it delivered. There is no more convenient way to invest directly in gold than with Vaulted.

vaulted
Vaulted

Gold

Glint

When of the best new ways to invest directly in gold is with Glint. Glint is a platform that lets investors trade real gold vaulted in Switzerland. All of Glint's gold is insured and investors enjoy minimal fees as well as a debit card they can use to spend their gold wherever Mastercard is accepted. Glint is the fastest way to cheaply buy and sell gold, and it's also the only way to use gold as a liquid asset. Anyone who wants to bring back gold as a medium of exchange should look into Glint.

glint
Glint

Gold

OneGold

OneGold is an alternative investment platform that provides access to assets backed 1:1 by real gold, silver, and platinum. OneGold fully insures all assets backed by their vaulting partners and investors can buy or sell their shares whenever they want. Take advantage of 24/7 and the ability to take profits any time by investing in gold with an alternative platform like OneGold.

onegold
OneGold

Gold

Gold is a treasure, and he who possesses it does all he wishes to in this world, and succeeds in helping souls into paradise.

Gold has consistently been one of the most highly coveted commodities in history. Gold is so synonymous with wealth that anything gold-colored instantly becomes tacky. Nevertheless, it has stood the test of time as a store of value and has even been useful in creating sophisticated technology. Do you see gold still occupying the same status in 100 years?

Gold is a treasure, and he who possesses it does all he wishes to in this world, and succeeds in helping souls into paradise.

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