The list of the biggest gold mining companies in the world includes many publicly-traded companies, which can be good investment opportunities for investors seeking to diversify their portfolio and get some exposure to the precious metal. Whether you want to invest in physical gold or one of the biggest gold mining companies in the world, there are benefits and drawbacks to both and we will discuss some of them.
Through history, gold has been a popular investment. The investor sentiment towards it fluctuates through time depending on the economic situation and the state of stock and bond markets, but many investors looking to build a diversified equity portfolio or seeking ways to hedge against potential market fluctuations often choose to allocate a portion of their capital towards gold. In 2017, even though the market continued its bull run and hit several record-highs, gold prices nonetheless gained around 13%, as investors drew the demand for the precious metal higher in fear of a big correction (take a look at some stocks that you should own in case of a correction).
In 2018, gold prices are expected to continue their appreciation, as the Fed has signaled that it might speed up tightening monetary policy and across the pond the ECB is considering scaling back monetary stimulus. In addition, as gold prices are quoted in US dollars, its price should see more upside as the greenback might slid amid higher interest rates and some degree of uncertainty surrounding President Trump’s economic agenda.
Two of the most common ways of investing in gold is to buy physical gold or to invest in a ETF that tracks gold prices. Investing in physical gold is cumbersome, as it involves costs associated with transportation and storage. On the other hand, buying shares of an ETF like SPDR Gold Shares (NYSEARCA:GLD) is much easier, can be done through most online brokerages from the comfort of your home or office and the shares are more liquid, so they can be bought and sold faster.
However, owning physical gold is not always the best way to get exposure to the precious metal. An investor also has the option to buy stocks of gold mining companies. The advantage of investing in a gold miner rather than a physical gold is that the increase in gold prices has a bigger impact on gold miners’ profitability. For example, let’s assume that the price per ounce of gold increases by 5% to $1,050 from $1,000. If you own physical gold, your return is 5%. However, if a gold mining company has the same $500 cost of production per ounce, its profit grows by 10%. Of course, it’s all theoretical and in a real-life situation there are many other factors to take into account when it comes to investing in gold miners. Another benefit is that most gold miners don’t mine just gold, but other metals and minerals as well, such as zinc, copper, or uranium, which offers more diversification.
However, there are also drawbacks. When one invests in a gold mining company, they bet that the company will perform as efficiently as possible and the management is committed to maximize shareholder value, which, unfortunately, is not always the case. In addition, the same math that we described for gold prices growth is true for the reverse situation, so when gold prices fall, a company stands to lose more in terms of profitability. In the end, whether you choose to invest in a gold mining company or physical gold depends on your preferences and investment style. Many investors hold both gold ETFs and gold-mining stocks, but if you are looking for a way to get exposure to gold as insurance against a market drop, you should focus more on gold ETFs, or, even better, the bullion itself. If you want to profit from gold prices growth, you should go for gold miners.
So, if you want to add stocks of some gold miners to your portfolio, then this list of the biggest gold mining companies in the world should prove useful. Of course, even though size does matter, bigger isn’t always better and you should do your homework and analyze the companies you want yo invest in in more detail. To give you a place to start we will also mention the hedge fund sentiment towards those stocks that are publicly traded on the US stock market. Choosing the stocks that rank as the most popular among hedge funds can bring you closer to beating the market, as our flagship “Best Performing Hedge Funds Strategy” shows. Our strategy focuses on the consensus picks of the top 100 best performing hedge funds every quarter and it has returned 74.4% since May 2014, beating the S&P 500 ETF (SPY) by almost 25 percentage points. You can access the latest picks from our strategy by checking out our newsletters free of charge for 14 days.
Having said that, let’s take a closer look at 13 biggest gold mining companies in the world.
13. Yamana Gold Inc. (AUY)
Total Production (ounces): 977,316
Yamana Gold Inc. (NYSE:AUY) is a Canadian gold producer, which operates six mines in Canada, Brazil, Chile, and Argentina. In addition to gold, Yamana Gold Inc. (NYSE:AUY) produces silver and copper. Last year, the company’s gold production exceeded its estimates by 2%, but was 3% lower than in 2016. In 2018 and 2019, Yamana Gold Inc. (NYSE:AUY) estimates gold production at 900,000 ounces and 940,000 ounces, respectively. At the end of 2017, there were 15 hedge funds in our database holding roughly 4.60% of Yamana Gold Inc. (NYSE:AUY)’s outstanding stock.