If the slight recent come-off in the gold price had you thinking that the story of the yellow metal is over, think again. Global investment bank UBS has just said that it’s very bullish on gold. A few weeks ago, PIMCO, which is one of the largest global investment managers, said that it too sees further upside to gold.
For investors looking to ride the gold wave, there are plenty of FTSE stocks to consider. These include FTSE 100 biggies like Polymetal International, Antofagasta, and Fresnillo and other stocks like Centamin. There’s plenty of coverage on all of them here, including my own, so I won’t get into the detail here.
I would like to focus on two smaller gold mining stocks – Greatland Gold (LSE: GGP) and Highland Gold Mining – instead. The reason being, both have been in news recently, and for that reason I reckon on investors’ minds.
Positive update drives up Greatland Gold share price
The Greatland Gold share price has seen a sharp rise in the past few months as investors rushed towards safe haven assets. But earlier this week the GGP share price received another shot in the arm, seeing a 10% increase after its drilling update. This adds to the boost from gold price increases. It has corrected since, but given expectations of rising gold prices, it could see further increases in the near future.
Is that reason enough to buy shares of the Australia concentrated miner, however? To be fair, it’s likely that at least over the next few months at least, the GGP share price will continue to rise. However, I’d bear at least two more points in mind as a long-term investor. One, it’s still pre-revenue. This means that financial stability may be a long way off for company.
Two, it’s an AIM-listed stock, which gives it flexibility. Earlier this year, the AIM-listed Eurasia Mining quietly stopped trading leaving investors pretty much high and dry. It resumed trading subsequently, and with a bang, but that’s a separate matter. The point I’m making here is simply this: there’s risk to buying shares of AIM-listed companies.
Highland Gold Mining share price static
Next, Highland Gold Mining has been in the news recently as well. But in this case, making a call is far easier because it’s due to be acquired by Fortiana Holdings for 300p per share, which is almost its current trading price. It’s unlikely to move very much from here. As a result, the verdict on this AIM-listed company focused on mining gold in Russia is clear. There’s little to gain from buying the share right now, even with rising gold prices.
The takeaway
If the gold price is attractive to you right now, I think it’s a better idea to stick to slightly bigger companies like Centamin, for a pure gold play. Among the biggest stocks, I like Polymetal International, which is a precious metals miner, not restricted to gold. But if I really want to play it safe, I’d look at a stock like Antofagasta, which also has interests in industrial metals.
