Markets rise and fall. I’ve accepted that. But I’m not prepared to sit back and wait for my money to wiped out by a market crash.
Sure, you can buy big companies included in the S&P/ASX200 Index (ASX: XJO) (INDEXASX: XJO) – such as BHP Billiton Limited (ASX: BHP) or Woolworths Limited (ASX: WOW) – to weather an economic meltdown.
However there’s one strategy which investors use to mitigate the risks of losing all their money during times of increased uncertainty, rapid inflation, or recession…
They buy gold.
Now, I’m not suggesting gold is recession-proof investment strategy. Nor do I believe is it a completely defensive play either.
However, after experiencing the worst gold price fall in 30 years throughout 2013, it appears now is the time to start buying gold miners. I recently added one growing miner to my portfolio (it’s listed below) but I am on the prowl for more.
Here are five gold stocks I’d buy today with $50,000.
1. Independence Group NL (ASX: IGO) is a diversified nickel, gold, copper and zinc miner with growing production. It’ll be a direct beneficiary of increased nickel and gold prices.
2. Silver Lake Resources Limited (ASX: SLR) is a $250 million West Australian gold miner. It recently put one of its high-cost mines on care and maintenance but is ramping up production from its Mount Monger operations.
3. Newcrest Mining Limited (ASX: NCM) is hard to go past since it is Australia’s biggest gold miner. It’d take a chunk of my $50,000. It has one of the longest reserve lives (based on current production forecasts) of any gold miner on the planet and boasts truly world-class assets, spread throughout the globe.
4. Northern Star Resources Ltd (ASX: NST) was actually a beneficiary of the huge gold price drop we experienced last year. It used its superior balance sheet to buy highly prospective mines from its struggling counterparts, at good prices. It also pays a solid dividend.
5. Doray Minerals Limited (ASX: DRM) is a junior gold play with a great mine, Andy Well, located in the Murchison region of Western Australia. It has a market capitalisation of just $137 million.
Of these five stocks, Independence Group is my favourite all-rounder and the gold stock I added to my portfolio less than a month ago (it’s already up a healthy 8%). For high-risk/high-reward investors, both Doray and Silver Lake appear great long-term buys whereas Northern Star presents itself as a compelling buy for those more risk-averse.
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Returns as of 6th October 2020
Motley Fool Contributor Owen Raszkiewicz owns shares in Independence Group NL.
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