Gold prices have firmed up in 2014, rising more than 8% since January to outperform the major stock market indices.
The rise in gold prices has naturally lifted the value of gold bullion, as well as popular gold ETFs like the SPDR Gold Shares (GLD) and the iShares Gold Trust (IAU).
But there are a handful of gold stocks that have dramatically outpaced the increase in gold prices, with gains of as much as 130% since January.
The reasons for this outperformance in gold stocks vs. gold prices is complex, but generally speaking, the causes include:
- Overly negative sentiment regarding gold mining stocks in 2013, which pushed stocks too low, too fast.
- Efficiencies and restructurings at a number of gold miners to adapt to new conditions and lower gold prices.
- A turnaround in gold pricing helps now, but hopes of continued increases bolster future outlooks.
5 Top Gold Stocks Now
So what are the gold stocks that have benefited most from this trend?
- Franco-Nevada Gold (FNV) is up 38% year-to-date vs. 7% for the S&P 500 and up 30% in the last 12 months vs. 18% for the S&P.
- AngloGold Ashanti (AU) is up 50% year-to-date and up 28% in the last 12 months.
- Agnico Eagle Mines (AEM) is up 53% year-to-date and up 44% in the last 12 months.
- Royal Gold (RGLD) is up 65% year-to-date and up 57% in the last year
- Sibanya Gold (SBGL) is up 127% year-to-date and up 212% in the last 12 months.
Now, after such big run-ups in pricing it might be unrealistic to expect similar performance going forward from these five hot gold stocks.
However, all of these gold investments are currently running at a profit — and the prospect of further increases in gold prices across the rest of 2014 and into 2015 could boost their outlooks.
If you want pure exposure to gold prices, there’s no better investment than actual gold bullion or a gold-backed fund like the GLD or IAU.
However, investing in individual gold stocks clearly can be a profitable enterprise when the precious metal has a nice tailwind.
Jeff Reeves is the editor of InvestorPlace.com and the author of The Frugal Investor’s Guide to Finding Great Stocks. As of this writing, he did not hold a position in any of the aforementioned securities. Write him at firstname.lastname@example.org or follow him on Twitter via @JeffReevesIP.