Gold ETFs Attain Record YTD Inflows Amid Global Uncertainties

The global uncertainty and financial-market volatility led to global gold ETFs seeing inflows of 623 tons (valued at $33.7 billion) during the January-May period, surpassing the previous high of 591 tons witnessed in 2009. In May, gold ETFs added 154 tons or $8.5 billion, taking the total holdings to an all-time high of 3,510 tons. Assets under management (AUM) hit a record $195 billion in May, aided by the combination of positive flows as well as higher gold prices. Per the World Gold Council, assets in global gold-backed ETFs have nearly doubled over the past 12 months.

This May, inflows were led by North American ETFs, which boosted holdings by 102 tons ($5.6 billion). Ongoing demonstrations in the United States and concerns that these will likely lead to a spike in coronavirus cases have been weighing on market sentiment. Total holdings stood at 1,815 tons, surpassing the previous high of 1,736 tons held in December 2012. European funds increased their holdings by 45 tons or $2.4 billion.  Asian funds, mainly in China, grew 4.7% or 4.4 tons ($262 million), while funds in other regions grew 4.3%, adding 2.6 tons ($136 million).

Gold for delivery in August closed at $1,727.40 on Jun 4, yielding a year-to-date return of 11.5%. This year, everything seems to be working in favor of gold, starting with the U.S-Iran tensions, the coronavirus pandemic, strained U.S.-China relations and the ongoing civil unrest in the United States.

On the back of the gold-price rally, the Gold Mining industry has gained 15.5%, year to date, as against the S&P 500’s decline of 3.5%. The industry falls under the broader Basic Material sector, which declined 7%.

Will Gold Keep Shining?

The pandemic has impacted gold production as miners had to suspend operations in accordance to government mandates. Per the World Gold Council, gold production in the first quarter declined 3% year over year — marking the steepest decline since first-quarter 2017. Consequently, an impending demand-supply imbalance bodes well for gold prices.

With the coronavirus pandemic showing no signs of dissipating any time soon, the uncertainty regarding the impact on the global economy will keep aiding gold. It will continue to be the preferred investment option supported by the low interest-rate environment as well as political uncertainties.

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 promising gold stocks, which have a combination of a VGM Score of A or B and a Zacks Rank #1 (Strong Buy) or 2 (Buy) and offer solid investment opportunities. You can see the complete list of today’s Zacks #1 Rank stocks here.

Our Picks

AngloGold Ashanti Limited AU: Based in Johannesburg, South Africa, the company currently carries a Zacks Rank #2 and has a VGM Score of B. The company has a long-term estimated earnings growth rate of 19.5%. The Zacks Consensus Estimate for 2020 earnings indicates a year-over-year surge of 59%. The estimate has been revised 5% upward over the past 60 days.

Barrick Gold Corporation GOLD: Based in Toronto, Canada, this company currently carries a Zacks Rank #2 and has a VGM Score of B. The Zacks Consensus Estimate for current-year earnings suggests a year-over-year improvement of 65%. The estimate has moved 11% north in the past 60 days. The company has a trailing four-quarter positive earnings surprise of 15.4%, on average. The stock has a long-term anticipated earnings growth rate of 2%.

B2Gold Corp. BTG: The Zacks Consensus Estimate for fiscal 2020 earnings of this Vancouver, Canada-based company suggests growth of a whopping 220% compared with the prior fiscal year. The estimate has been revised 10% upward in 60 days’ time. The company surpassed estimates in each of the preceding four quarters, the average positive surprise being 21.5%. The stock currently holds a Zacks Rank #2 and has a VGM Score of A. The stock has a long-term projected earnings growth rate of 16.3%.

Pretium Resources Inc. PVG: This Vancouver, Canada-based company also carries a Zacks Rank #2 currently and has a VGM Score of A. The Zacks Consensus Estimate for the current fiscal year suggests year-over-year growth of 16.4%. The estimate has gone up 8% over the past 60 days. The company has a trailing four-quarter positive earnings surprise of 33.1%, on average.

Kinross Gold Corporation KGC: Based in Toronto, Canada, the company presently holds a Zacks Rank #2 and has a VGM Score of A. The Zacks Consensus Estimate for ongoing-year earnings indicates a year-over-year jump of 61%. The estimate has moved 17% north in the past 60 days.The company has a trailing four-quarter positive earnings surprise of 38.8%, on average.

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