Gold story remains intact – Three good ideas for every portfolio: Dryden Gold, Kinross Gold, and Barrick Mining

Barrick: Gold price drives growth

The combination of inflation fears, currency concerns and war has driven gold to new highs this year, with the gold price reaching an all-time high of around USD 3,500 per ounce. That is almost 95% more than at the start of the war in Ukraine in February 2022. HSBC analysts have revised their forecast for the gold price upwards and also see the risk of further rising government debt as supporting the precious metal. Investors looking to invest in gold have several options: Physical investments are the classic choice and are suitable as crisis insurance and a reserve asset. ETFs offer the opportunity to take tactical positions, but excess returns are not possible. Gold stocks, on the other hand, offer very different risk/reward profiles. Barrick Mining is considered the world's second-largest gold producer.

According to the Reuters news agency, Barrick posted strong results in the second quarter despite a slight decline in production. At 797,000 ounces, gold production was below the previous year's figure of 948,000 ounces, but the high gold price boosted revenue significantly. The adjusted net profit was USD 0.47 per share, exceeding analysts' expectations by 2 cents. Barrick Mining increased its cash flow in the first half of the year by 32% compared to the same period last year and generated free cash flow of a whopping USD 770 million. Here, too, the Company is benefiting from the high gold price. Barrick's stock is increasingly seen as a conservative alternative, as its balance sheet is solid and the Company is returning capital to investors through share buybacks. However, Barrick Mining is unlikely to generate significant excess returns compared to the gold price.

Kinross Gold: A good second-tier alternative

The situation looks somewhat better for mid-sized producers such as Kinross Gold. Kinross produces between 2 and 2.5 million ounces of gold annually. Key assets in its portfolio include Paracatu in Brazil, Fort Knox and Round Mountain in the US, as well as the Tasiast mine in Mauritania. The latter has recently been expanded and is now considered one of Kinross' most cost-efficient mines. The Company is trying to continuously find new resources on its projects in order to increase its overall value. Although its regional focus is diversified, it still maintains a focus on secure legal jurisdictions. This summer alone, several analysts issued "Buy" recommendations for the stock, including UBS and National Bank Financial. The stock has the potential to outperform the gold price, though with a market capitalization of around USD 20 billion**, the potential remains somewhat limited.

Dryden Gold: Bonanza grades and plenty of upside

The Dryden Gold share is in a completely different league. Dryden does not have any active gold mines, but is advancing promising properties. The Company focuses on projects in the northwestern Ontario district of Canada, particularly historic gold mines in the Dryden Belt that have not yet been explored using modern methods. What makes companies like Dryden special is that they are traded at a significant discount because potential production is still a long way off. Dryden's shares are therefore currently valued at only around EUR 20 million. Nevertheless, there are already initial indications of the potential of Dryden Gold's projects: The team discovered several high-grade ore trends near the town of Dryden. The Elora Jubilee System in particular yielded bonanza grades of 301.7 g/t gold over a distance of 3.9 m. The Company also encountered gold in neighboring zones, some of which is visible to the naked eye. Further drill results are currently pending. If Dryden Gold succeeds in identifying contiguous gold zones, the Company could become the focus of producers looking to acquire assets in safe jurisdictions. Dryden Gold is already well known within the industry. Mid-sized producer Centerra Gold has already taken the plunge and secured a 9.9% stake in Dryden.

Analysts optimistic – Gold stocks for every type of investor

Analysts also find the stock interesting: Research firm Couloir Capital set a price target of CAD 0.65 in June, representing more than 100% upside potential based on the current price. While progress at gold producers tends to be announced gradually and valuation adjustments are also slow, things can move quickly for project developers such as Dryden Gold – after the drilling results in June, the share price jumped by more than 50%. While conservative investors are well served by stocks such as Barrick Mining or Kinross Gold, those looking to add some spice to their portfolio should also consider stocks like Dryden Gold. Moderately allocated**, these stocks are even suitable for investors with a conservative risk profile.