Gold Investing News: These 2 Stocks Could Gain 19.4% and 29.4%

gold investing newsThe biggest gold investing news of 2017 has been the price of gold's huge rebound.

Since the first trading day of the year on Jan. 3, gold prices have gained 7.5% to $1,240. This rise follows a 9.8% decline during the last two months of 2016 that ended with gold bottoming at $1,132 on Dec. 15. Not only that, but the gold price's 2017 climb so far outpaces both the S&P 500's 3.1% rise and the Dow Jones Industrial Average's 2.1% gain.

And Money Morning Resource Specialist Peter Krauth says the price of gold will continue to outperform the broader market in 2017. In fact, he estimates that gold will trade at $1,400 per ounce by the end of the year. That's up 12.9% from the current price of $1,240.

Those gold price gains will also make gold stocks strong investments this year. That's why we're recommending two of the best gold stocks to buy in 2017. One of them could soar as high as 29.4%, while the other could climb a solid 19.4%.

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The best part about these two companies is that they're both in the gold mining sector, which stands to benefit the most from higher gold prices. After all, high-priced gold means more profits for the firms that produce the metal.

But first, here are the two reasons why Krauth thinks gold prices will rise 12.9% this year...

2 Pieces of Gold Investing News That Will Boost Gold Prices in 2017

The first bullish news is the trend of declining short bets in the gold market.

A short bet is when someone invests in the possibility of a stock dropping rather than increasing. As a result, a large volume of shorts on a commodity or stock means most investors aren't confident that its long-term value will rise.

But the number of short positions has been steadily declining in the gold sector. The Gold Bugs Short Index - which tracks short-selling activity on mining companies - is down 16.7% so far this year. The reduced interest in short bets shows investors are becoming more confident in a gold price rally in 2017.

The second piece of 2017 gold investing news is the strengthening U.S. dollar.

Yes, the price of gold and the dollar typically move in opposite directions. If one increases in value, the other usually decreases. This was obviously true during Q4 2016 when gold prices dropped 12.8% as the dollar surged 7.1%.

But Krauth believes gold will rise despite the rising dollar and Fed's projected 2017 rate hikes. If history is any indication, gold and the dollar are capable of rallying simultaneously...

Back in the 1970s, interest rates consistently hovered above 5%. Then Fed Chair Arthur Burns raised rates to a record 13% in 1974. Then in 1979, rates were hiked to a new all-time high of 15.5%. That's over 20 times higher than the current 0.75% rate set in December 2016.

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You'd think the price of gold would be crushed in those years. But by the end of the decade, gold was 24 times more expensive than it was at the beginning.

In addition, we expect the strength in the dollar stemming from the December rate hike to wear off eventually. When it does, gold prices will start their long-term rally to $1,400 an ounce.

And the gold price rise will result in a 19.4% gain for our first gold stock pick and a 29.4% gain for our second.

Here are the two best gold stocks to buy in 2017...

Invest in These Gold Stocks in 2017 for 19.4% and 29.4% Returns

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Our first gold stock pick comes highly recommended by Money Morning Executive Editor Bill Patalon. It's Goldcorp Inc. (NYSE: GG).

Yes, the 2016 performance of GG stock lagged behind its peers. Shares of Goldcorp gained 12%, while competitors Agnico Eagle Mines Ltd. (NYSE: AEM) and Newmont Mining Corp. (NYSE: NEM) skyrocketed 54% and 83.8%, respectively.

But Goldcorp plans to lead the pack over the next few years in terms of production. The company expects to increase its gold output by 20% through 2022. Increased gold production will result in bigger profits as the gold price rises 12.9% to $1,400 this year.

And Patalon - a 30-year veteran analyst of financial markets - considers it one of the best-operated companies in the mining sector.

"Goldcorp is one of the better-run major miners. If there's any kind of prolonged rally in gold, as I expect there will be, Goldcorp will be a big beneficiary," Patalon explained.

The GG stock price closed at $16.94 per share yesterday (Wednesday, Feb. 8). A Yahoo Finance survey of analysts shows Goldcorp has a one-year target of $20.22. That's a solid 19.4% gain from GG's last close.

The second best gold stock to buy this year is Barrick Gold Corp. (NYSE: ABX), the largest gold producer in the world. It boasts a huge $21 billion market cap and mines for gold on five continents.

What we love about Barrick is its incredibly low all-in sustaining cost (AISC). A firm's AISC is how much it costs that company to produce one ounce of gold. Barrick currently boasts an AISC of roughly $760. That's 39% below the current gold price of $1,240. For every ounce of gold Barrick sells, it theoretically makes a return of $480.
This profitability shows in ABX's performance this year. As of the last close on Feb. 8, the ABX stock price has risen 22.5% to $19.58. A Yahoo Finance survey of analysts indicates a high-water price target of $25.34 by February 2018. That's a generous 29.4% gain from the last closing price.
As you can see, 2017 will turn out to be a lucrative year for gold investors.

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