By Tayo Olayinka
Gold has always been the hallmark of prestige and power. It’s no surprise that it remains the standard to fight against inflation and one of the most precious metals to own. Interestingly, you don’t have to buy physical gold anymore, as you can invest in gold stocks in Canada if you want exposure to gold without the need to store the metal physically.
This flexibility to invest in gold stocks eliminates the need to keep the gold in its physical form and eventually worry about its possession and care. So, if you’re a seasoned investor or a beginner, this guide will explain how to buy gold stocks in Canada, what you should consider, and the best gold stocks available for you as a Canadian investor.
1. Why invest in gold stocks?
Gold stocks allow you to profit from the rise in gold stock prices without owning physical gold. When you invest in gold stock, it comeswith more flexible options as gold companies often pay dividends, provide growth potential, and give exposure to a globally valuable commodity.
Key benefits
- Leverage over gold prices: When gold prices rise, gold stocks tend to rise even more because of the company’s increasing profitability.
- Dividend payments: Some gold companies, such as Agnico Eagle Mines and Franco-Nevada, consistently pay dividends to shareholders.
- Diversification: Investing in gold stocks exposes your portfolio to the precious metals sector, balancing risk from other assets such as stocks and bonds.
2. Steps to buy gold stocks in Canada
Step 1: Choose a brokerage account
You’ll need to sign up with a brokerage platform to buy gold stocks. Here are some of the most popular online brokerages in Canada:
- Questrade: Known for its low fees and ease of use, it is great for beginners and intermediate investors.
- Wealthsimple Trade: Offers commission-free trades, making it an affordable choice for casual investors.
- RBC Direct Investing: Ideal if you prefer banking and investing with a single institution.
Ensure the platform provides access to Canadian markets, such as the Toronto Stock Exchange (TSX), where most Canadian gold stocks are listed.
Step 2: Research gold companies
Before investing, you need to understand which gold companies are performing well. In 2024, top Canadian gold stocks include:
- Franco-Nevada (TSX:FNV): This royalty and streaming company focuses on low-risk, stable cash flow from multiple mining operations.
- Barrick Gold (TSX:ABX): A mining giant with extensive operations worldwide.
- Agnico Eagle Mines (TSX:AEM): A dividend-paying company focused on North American operations.
- Kinross Gold (TSX:K): A diversified mid-tier gold producer with solid dividend potential.
Each company provides different advantages, such as dividend yields, production growth, or exposure to global mining markets.
Step 3: Monitor the market
Inflation, interest rates and global political stability drive gold prices. It is crucial to monitor these trends closely before investing. Gold mining companies with low production costs, such as Agnico Eagle Mines or Alamos Gold, will typically fare better in volatile markets.
3. Best Canadian gold stocks to consider
Here’s a breakdown of the top-performing gold stocks in Canada:
Franco-Nevada
Franco-Nevada operates under a royalty model, which means the company provides financing to miners in exchange for a percentage of their future production. This reduces operational risks while ensuring steady cash flow, making it a lower-risk option for investors.
Agnico Eagle Mines
Founded in 1957, Agnico Eagle Mines has been a reliable gold producer in Canada. The company is known for its disciplined operations, consistent dividends, and a strong emphasis on environmental sustainability.
- Dividend Yield: 1.95%
- Market Cap: $40.98 billion
- Appeal: Great for long-term dividend growth investors.
Kinross Gold
With operations spanning North America, South America and Africa, Kinross Gold is a mid-tier producer offering a good balance between growth and dividend income. The stock is often considered undervalued, with a price-to-book ratio below 1.
- Dividend Yield: 2.05%
- Market Cap: $16.63 billion
- Appeal: Attractive for value investors looking for dividends.
Barrick Gold
Barrick is one of the largest gold producers globally, operating in 18 countries. It remains a stable choice for investing in large-scale mining, benefiting from its massive reserves and diversified operations.
- Dividend Yield: 1.94%
- Market Cap: $49 billion
- Appeal: Global presence with consistent production growth.
Alamos Gold (TSX:AGI)
Alamos Gold is a mid-tier producer that operates mines in Canada and Mexico. The company has a solid balance sheet and growth projects in the pipeline, making it an excellent pick for investors looking for development potential.
- Dividend Yield: 0.7%
- Market Cap: $11.43 billion
- Appeal: Strong financial health and future growth projects.
Osisko Gold Royalties (TSX:OR)
Osisko is a royalty and streaming company involved in more than 135 mining projects across North America. The company’s focus on earlier-stage mining ventures provides long-term growth potential.
- Dividend Yield: 0.96%
- Market Cap: $5.05 billion
- Appeal: Ideal for investors looking for speculative growth.
4. Tips for success when investing in gold stocks
Diversify your portfolio
Don’t put all your money into one gold stock. Consider diversifying by purchasing shares in multiple companies or even buying shares of ETFs such as iShares S&P/TSX Global Gold Index ETF, which tracks a basket of gold stocks.
Stay updated on gold prices
Monitor gold stock prices regularly, especially about broader economic events. Rising interest rates or political instability can drive gold prices higher, benefiting your investment in gold mining companies.
Long-term strategy
Gold stocks can be volatile in the short term. A long-term strategy – holding onto quality stocks such as Franco-Nevada or Agnico Eagle Mines for years – can result in substantial growth as these companies continue to expand production and pay dividends.
Conclusion
It could be a lucrative choice if you are new to investing, particularly in gold stocks in Canada. Many companies, such as Franco-Nevada, Barrick Gold and Agnico Eagle Mines, offer long-term stability and income through dividends.
However, just like any other investment, you should research, select the right brokerage, and do other due diligence to confidently add new gold stock investments to your portfolio for 2024.
As gold is often seen as a hedge against economic uncertainty, gold stocks are an excellent way to diversify your
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(Top photo: Adobe Stock)