Kitco: 2 Mining Stocks Cashing In on Gold’s Shine

Gold prices have been holding up well around the $2,500 mark. The metal has outperformed the S&P 500 year-to-date, gaining over 20%. And strong demand for the metal from both central banks and individual investors may help continue to push the price higher.

With interest rates about to decline, gold may have further upside. The metal can also hold up as a safe-haven asset amid uncertainty. These trends bode well for the metal. And as the metal goes, gold stocks follow.

That’s seen with several gold mining stocks, particularly the major operators. These companies have a global footprint, and operate several mining projects. That reduces the risk of any one project facing downtime or other significant concerns.

As gold prices rise, gold mining companies tend to see improving profit margins. Costs are relatively fixed in the short-term. As more gold is mined and sold at higher prices, that translates directly into more cash that can go to shareholders.

One of the world’s largest mining companies, Barrick Gold (GOLD), is up just 10% year-to-date. That’s underperformed the metal. But shares are trending higher, and could stage a catch-up rally to match the metal’s move higher.

Meanwhile, Barrick pays a 2% dividend, and could pay out more as gold prices rise, depending on the level of profitability.

For now, with gold trending higher, gold stocks have more room to run in the quarters ahead.

To read the full opportunity in gold and the second miner worth buying, click here.