The best gold stocks to buy are set to outperform the stock market by a wide margin this year. And today, we're bringing you one of the best gold investments that could skyrocket 65.8% in 2017.
We're confident this stock will beat the broader market because gold prices are set to do the same in 2017. After all, the price of gold is up 8.2% to $1,249 so far this year. That beats the Dow Jones Industrial Average's 5.3% gain over the same period. And we expect gold to rise another 12.1% to $1,400 an ounce by the end of the year.
Here are two factors that will push the gold price to that mark in 2017...
2 Bullish Factors for Gold Prices in 2017
According to Money Morning Resource Specialist Peter Krauth, the first factor that will boost prices is the likely rise in inflation this year.
Unfortunately, inflation often goes hand in hand with a rising stock market. An advancing market also affects the U.S. dollar's purchasing power. Neither inflation nor a weaker dollar benefit the economy because they both reduce consumer spending.
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A primary purpose of the U.S. Federal Reserve is to keep the inflation rate low. In fact, its rate hike last December was intended to keep any further inflation under control.
In addition, yields on the 10-year Treasury note have also been advancing. The 10-year yield currently hovers near 2.39%. That's a huge jump from 1.56% just six months ago. Rising yields often boost the inflation rate, which hit a nearly five-year high of 2.5% in January.
Rising inflation scares investors. Since inflation generally increases the prices of goods across the economy, it makes everything more expensive for consumers and dissuades them from spending money. That fundamentally hurts the economy and can lead to stock market volatility.
In times of investor fear and uncertainty, they buy safe-haven investments like gold. This use of gold as a hedge against a possible market downturn will increase the price of gold in 2017.
Krauth's second reason is that the volume of short bets on gold stocks will keep sinking.
When traders think that a share price will drop, they can place a short bet. That way, if it does decline, they make money on their bet. As a result, a rising number of short bets in the gold market means that many people think gold prices and gold stocks will perform poorly in the future.
Editor's Note: An incredibly rare gold anomaly is shaping up in the markets as we speak -- one that has occurred ONLY twice in the past 20 years. And it's about to happen again. Details here...
Sentiment toward gold stocks has been turning bullish as the number of short bets has declined recently. The Gold Bugs Short Index, which follows short selling on gold producers, is down 14.6% this year. That means traders are starting to think the gold market will become more valuable.
Both of these factors make us confident our gold stock recommendation will climb as much as 65.8% over the next 12 months.
Here's one of the best gold stocks to buy this year...
One of the Best Gold Stocks to Buy in 2017 for a 65.8% Return
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The best gold stock to buy is Goldcorp Inc. (NYSE: GG).
At $16.89 per share, GG is up 24.2% year to date. That means investors who owned it on the first day of the year have already made a 24.2% return on their investment.
Canada-based Goldcorp is the world's fourth-largest producer of gold. The company mined 3.8 million ounces of the yellow metal in 2015.
But the main reason why we love Goldcorp stock is the company's mining expenses. The firm boasts a very low all-in sustaining cost (AISC). In fact, it is among the lowest of all gold miners.
Goldcorp's AISC is $812. That means the company spends $812 for every ounce of gold it produces. With the current gold price at $1,249, Goldcorp theoretically earns $411 for every ounce of gold.
Factor in the expected 12.1% climb in the price of gold and you have a recipe for profitability.
Money Morning Executive Editor Bill Patalon also loves Goldcorp because of its highly successful crowdsourcing experiment...
In 2000, the company opened up its geological databases to the public and let people choose its next mining sites. The public chose 88 sites out of the possible 110 that had significant gold deposits. This has provided Goldcorp with a number of new mining sites to explore and monetize.
Shares of GG stock did well last year, advancing 11.8%. Still, many other gold mining stocks did much better in 2016. Agnico Eagle Mines Ltd. (NYSE: AEM) and Barrick Gold Corp. (NYSE: ABX) soared over 54% and 104% in 2016, respectively.
But Goldcorp is well-positioned to be one of the best gold stocks to buy not just this year, but also over the next five years. That's because it plans to hike gold production by 20% through 2022. The company will be able to cash in on the rising gold price by meeting demand and producing more gold.
Shares of Goldcorp stock trade near $16.89 each. Analysts' highest one-year price target for GG stock is $28. That means investors who buy in right now could see a stunning 65.8% return by February 2018.
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