Gold is on a tear following its disappointing 28% drop in 2013.
"Gold rebounded from December into mid-March, adding $200 an ounce, or nearly 17%," Money Morning's Resource Specialist Peter Krauth said. Gold stocks are up as well, and investors are looking for the best gold stocks to buy.
And according to Krauth, that's a good move - he's bullish on gold stocks in 2014.
"To a large extent, I think the bears were exhausted, and most (if not all) sellers had finally sold," Krauth said. "So, gold was coming off a technical low and sentiment extreme around the $1,190 price range."
Krauth pointed to the U.S. Federal Reserve's quantitative easing program and ultra-low interest rates in the United States, Japan, Europe, and China as contributing factors to gold's recent growth.
Additionally, the unstable political news out of Ukraine has pushed gold's value higher. Safe-haven investments like gold and other precious metals become more sought after when geopolitical tensions mount.
With gold at $1,326 an ounce this week and showing further bullish signs, here's how to cash in with the top gold stocks to buy now...
Three of the Best Gold Stocks to Buy Now
"ConsiderRoyal Gold Inc., a $3.3 billion royalty company, with interests in more than 200 production, development, and exploration-stage royalties," Krauth said. "Royal Gold boasts $680 million in working capital and $350 million in undrawn credit it can put to work."
According to Krauth, royalty companies are extremely profitable right now. Gold miners face numerous issues at the moment, and that has them leaning heavily on royalty companies like RGLD.
"In this trying environment for miners struggling with rising production costs and scant financing options, royalty and streaming companies have the upper hand, able to do financing deals with extremely favorable terms (for them)," Krauth said. "They have cash when cash is scarce, and that will pay off big time."
RGLD stock has jumped nearly 46% year to date and 7% in the month of April.
Royalty companies like RGLD are strong plays, but they aren't the only promising gold stocks to buy - these two companies allow investors to take advantage of a different gold subsector...
Goldcorp Inc. (NYSE: GG) is a gold stock that Money Morning's Executive Editor Bill Patalon has been tracking in 2014. Goldcorp is a major mining firm that operates, explores, develops, and acquires precious metal properties in Canada.
Patalon has been recommending the stock since May 2013, but a hostile takeover bid for Montreal-based mining company Osisko Mining Corp. (OTC: OSKFF) had him re-recommending the stock in February.
"The bid shows me that Goldcorp is continuing with the same aggressive-but-controlled growth strategies that attracted us to the stock in the first place," Patalon said. "Most of its projects are in locations that are very stable geopolitically. And Goldcorp currently holds about $1 billion in cash. The Osisko acquisition would provide a substantive boost to Goldcorp's earnings power."
It isn't just Patalon who's bullish on GG stock. Krauth loves the Canadian firm as well...
"If you look carefully at the company, you'll see that - over the next three years - production will grow by about 15% annually," Krauth said. "But I expect profits to soar because I expect fixed costs to remain stable, and I'm projecting that gold prices will rise considerably over that time. If that happens, because of the way Goldcorp is structured, most of the increase in the gold price is likely to make it to the bottom line."
As domestic demand for gold increases and gold prices follow suit, GG is a strong play on the precious metals market. GG stock is up nearly 12% in 2014.
Finally, Newmont Mining (NYSE: NEM) is a third gold stock to buy as gold prices continue to rise in 2014. NEM operates gold properties in the United States, Australia, Peru, Indonesia, Ghana and New Zealand.
Often, the price of gold will be reflected in the performance of mining stocks. When gold prices are surging, mining stocks will frequently perform well. When gold prices are down, like they were in 2013, mining stocks like NEM can suffer.
As Money Morning wrote recently, NEM is a very strong mining play when prices are climbing. And its recent strategy gives it a leg up on its mining competition.
Newmont is streamlining operations by selling off portions where it doesn't see a competitive advantage. In 2013, it sold its investment in Canadian Oil Sands, as well as its Midas Mill Complex in Nevada. Newmont's financial flexibility and its ability to churn out gold through a number of avenues will be a catalyst for Newmont stock.
It's also the second-largest gold producer in the world, has mines in fairly safe regions, and possesses plentiful reserves.
Since the beginning of February, NEM stock has climbed more than 12% - it has even more room to grow as the price of gold continues higher in 2014.
Do you own gold stocks or are you interested in investing in gold? Join the conversation on Twitter @moneymorning using #GoldStocks.
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