Finding the best gold stocks to invest in takes a considerable amount of research. Analyzing the state of the gold market and digging into a company's financial documents are never fun tasks.
3 More Catalysts That Will Boost Gold Prices in 2017
Money Morning Resource Specialist Peter Krauth expects the price of gold to gain 11.6% from the current $1,254 level to $1,400 by the end of 2017. Although that's not a huge return, profits from the gold mining sector could explode from the price increase. After all, miners make more money on each ounce they produce when the gold price climbs.
Before we get into our gold stock recommendation, here's why our 2017 gold price prediction is bullish...
Why Gold Prices in 2017 Could Climb 11.6%
One big reason we're bullish on gold is the stock market, which appears to be cooling off right now.
You see, the stock market has been on a roll for most of 2017, with the Dow Jones surging 6.8% from Jan. 1 to March 1. These sorts of conditions aren't optimal for gold prices. This is generally the case when investors feel secure with the market conditions, which we're finding to be far from the case right now.
Yes, the Dow has blasted through the 20,000 and then the 21,000 marks this year, but there is a growing sense of unease among investors. Since March 1, the Dow has dropped 2.4%. This has investors thinking we could be headed for a serious downturn.
When there's increased chatter about a stock market bubble, investors begin looking for safe havens like gold. There is little doubt today that our market is overvalued, and investors have begun piling gold investments into their portfolios for safekeeping, which is good news for gold prices.
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Another reason that gold prices are going up this year is inflation. Our current inflation rate has reached a five-year high of 2.7%. In an effort to control inflation, the U.S. Federal Reserve has raised interest rates twice since December 2016.
On March 15, rates were bumped 0.25%, which brought the federal funds rate up to the 0.75%-1% range. According to Fed Chair Janet Yellen, there could be as many as three more rate hikes in 2017.
Higher interest rates are supposed to boost the U.S. dollar's value, but the U.S. Dollar Index (DXY) has fallen from 103.10 to 100.61 since the December rate hike. A weaker dollar typically pushes the price of gold higher because the metal becomes more affordable for buyers using other currencies.
These factors have pushed gold prices up 8.9% so far this year and will help boost them another 11.9% to $1,400 by the end of 2017.
While you could buy some gold bullion and make a nice profit, the best return on your investment in 2017 will be from gold mining stocks. This is because these companies will leverage these price gains to boost their profit margins.
Here's one of the best gold stocks to invest in, which could deliver investors an 89.7% return by next April...
One of the Best Gold Stocks to Invest in Will Gain 89.7% in 12 Months
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The company has major mines in Canada, the United States, Mexico, and Central and South America. In addition to gold, it also produces copper and silver.
There are several reasons that Goldcorp is a top gold mining stock this year. The first is that it is planning to grow its output by as much as 20% over the next five years, which will grow its profit margins as gold remains in a long-term bull market.
The second is its efficient operations, which stems from its all-in sustaining cost (AISC). That measures how much it costs for a gold miner to produce one ounce of gold. Goldcorp's AISC is $812, which is one of the lowest in the industry. As gold nears $1,400 an ounce, Goldcorp's profit margins will continue to increase.
In the last two weeks, Goldcorp stock has experienced a correction, which presents a unique buying opportunity for investors. Shares of GG are down over 8.1% since a March 28 company announcement that will be a long-term boon for the stock.
Goldcorp said it would acquire interests in several of Barrick Gold Corp.'s (NYSE: ABX) gold mines in Chile. Under this new deal, Goldcorp and Barrick will be 50/50 partners in the Cerro Casale mine - one of the largest gold mines in the world - and will also own a small adjacent project.
Even though the GG stock price dropped due to the company spending millions on the acquisitions, it's actually a good deal for both companies. Goldcorp now has a 50% stake in one of the planet's most lucrative gold mining projects during a time when locating new resources has become a struggle.
The fact that the two most dominant gold miners in the world are now working together can only benefit them both. The temporary lull in Goldcorp's stock price could be one of the best buying opportunities of 2017.
GG stock is trading at $14.76, with shares up 8.5% year to date. A recent Yahoo Finance survey of analysts concluded Goldcorp stock could soar to $28 a share by April 2018. That means investors who buy one share now could see an 89.7% return on their investment in 12 months or less.
Any investor looking to enter the gold market can't miss an incredible profit opportunity like that.
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