There’s a better potential haven than gold for investors spooked by the risk of a recession this year — mid-sized producers who’ve outperformed both bullion and the rest of the mining industry.
Companies including Canada’s Kirkland Lake Gold Ltd. and Australia’s Northern Star Resources Ltd. have scope to extend gains and should be in focus for investors looking for a safe harbor, according to Joe Foster, New York-based portfolio manager for the $600 million Van Eck International Investors Gold Fund.
Kirkland Lake, Northern Star and two rivals have the best returns in the Bloomberg World Mining Index over the past 12 months — a period during which both the gold price and the equity benchmark have declined.
“Gold responds to global financial risk and so, if you believe that, the best way to play gold is with these gold stocks,” Van Eck’s Foster said in an interview. “They carry leverage to gold and in a good gold market, they will outperform.”
Spot bullion began rallying in the last quarter and is forecast to end this year higher, according to analysts’ estimates compiled by Bloomberg. The metal will climb to $1,425 an ounce, a price level not seen in more than five years, as geopolitical tensions fuel central bank purchases and recession fears boost demand for defensive assets, Goldman Sachs Group Inc. said this month.