Here’s What I Think of Gold Stocks

Gold Rally Stocks

Gold. I’ve listened to people pump it since 2011. When gold stocks hit all-time highs during that year’s government shutdown, the very aggressive predictions came. Peter Schiff, a well-known yellow metal bug with no conscience, said it was heading to $5,000. Then it went into a bear market, where it stayed for nearly a decade.

Slow clap for this gentleman. He’s sold a dream of big profits yet underperformed left and right for his customers. But don’t worry. The next crisis is around the corner. It’s always around the corner. How else would he sell more gold?

When and if gold stocks hit $2,500, people like him will take a victory lap. Yet, they’ll never acknowledge that they cost some people the greatest Bull market of all time.

Imagine buying up gold at $1,900 in 2011. Then, ten years later, it’s trading for $100 less. It offers no dividend. There is no real protection at all from inflation (the dollar’s purchasing power has declined by 15.1% over the decade)

Unreal. Look, I’m not anti-gold. I’m anti-hype.

Are Gold Stocks a Good Investment?

I do not like it when people sell fear the way that vendors do around gold. Let’s be honest, if you’re buying gold to protect yourself against the threat of a collapsed civilization, you’re buying the wrong commodity. You should own a lot of bullets. And a lot of canned food.

But I do allocate a small amount of money to gold. It’s shiny. It sits in a safe. It’s fine. That said, I do think we’re heading into a period where gold prices are about to push higher. The reason is simple: Gold is just as susceptible to supply chain shock as any other commodity.

But I don’t want to invest in a Gold ETF and let the fund managers collect the minimal amount of return that I might garner. And I’m not buying any more physical gold.

So, what am I doing? Well, I’m combining anomalies and metrics with the trend at hand. And I just saw a CFO of a very tiny gold producer buy up some stock.

So, I’d be checking out Vista Gold (NYSE:VGZ), a small gold mining firm that looks pretty undervalued. Its CFO just bought some stock this week. It wasn’t much, but it was enough to alert me to analysts’ expectations. There could be a very steep upside for speculators. In addition, I just found out about a gold stock that trades over the counter.

As you know, I am always looking for stocks that have a Piotroski F Score of 9 and an Altman Z score above 3. These signals tell me that a company has a rock-solid balance sheet. They also offer a clear understanding of what is working well in the economy. You can’t fake this sort of performance.

Torex Gold Resources (OTC:TORXF) trades at $13.70 per share. But Wall Street suggests that it’s fairly valued and could experience a big jump if gold starts to run. The consensus price target is north of $23.00.

This is a great discovery. Using these tools offers me a way to identify companies that are completely off the radar.

I do think that gold stocks are heading higher. But I don’t believe that buying the physical stuff is the best path. Instead, I look for beaten-up companies that are deeply undervalued or take clear signals from corporate insiders who are confident about their firms and market trends.

Garrett Baldwin
Garrett Baldwin
Garrett Baldwin joined Godesburg Financial Publishing as Chief U.S. Markets Analyst in early 2021. A Johns Hopkins-trained Economist, he’s worked with hedge funds, venture capital firms, angel investors, and economic advisors to the U.S. government. Baldwin specializes in market anomalies and alternative investments. He’s written extensively on momentum, value, insider buying, and other unique strategies that provide investors that elusive edge.
Garrett Baldwin
Garrett Baldwin
Garrett Baldwin joined Godesburg Financial Publishing as Chief U.S. Markets Analyst in early 2021. A Johns Hopkins-trained Economist, he’s worked with hedge funds, venture capital firms, angel investors, and economic advisors to the U.S. government. Baldwin specializes in market anomalies and alternative investments. He’s written extensively on momentum, value, insider buying, and other unique strategies that provide investors that elusive edge.

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