The 7 best gold mining stocks

When I am talking about the best gold mining stocks of course I am talking about the best gold mining stocks to invest in. It all boils down to finding the right balance between risk and returns. This is even more important with gold mining stocks than with regular stocks. This balance should be as perfect as possible.

I am not afraid in investing in a high-risk gold mining stock as long as the potential return would be high. That being said, spreading your risk is evenly important as with regular stocks. So never put your money in that single golden chance. Spread your money between several gold mining stocks with different characteristics.

Therefore I am investing in 7 different gold mining stocks. Some have a limited risk, others have a bigger possible return with higher risks. And then, for me, there are other requirements to meet.

Besides a gold price that is going up a gold miner should have another big advantage for me to pick that stock. I try to profit from the rising gold price as well as some other advantage.

Putting it differently, whenever the gold price remains stable my gold mining stock should be able to go up nevertheless. Here I will discuss what makes a gold mining stock an interesting one to invest in.

Gold mining stocks from very large gold miners

I am not investing in the biggest gold miners! That may sound peculiar but I will explain it. Stocks of large gold miners go up or down less than smaller sized gold miners. That fact alone makes it less interesting. The growth potential is limited. A large gold miner cannot double its size overnight.

An even trickier thing to consider is that gold mines may get exhausted. A large gold miner is constantly looking for new gold mines. Explorable land on their own often are not sufficient. That is why they are often obliged to take over smaller competitors or lands from competitors.

With lower gold prices this is no problem. But when the gold price is on the rise these buy-outs will get really expensive. It will almost always suppress the returns.

So the main reason why I do not invest in very large gold mines is the fact that they cannot profit optimally from a higher price of gold. 

Gold mining stocks from medium-sized gold miners

These are the stocks I love to buy. But of course they will have to meet some important criteria. There are many considerations but the following are strong points in my book:

  • Rising production volumes
  • Costs that go down (AISC)
  • Some new gold mines in construction
  • Good and experienced management, preferably with a background in gold mining
  • Not as well known as others and therefore lagging a bit behind on the markets
  • Possession of land with gold in it (proven)
  • Several gold mines in production
  • Being profitable is not always necessary but they will need to have a solid financial basis
  • Important shareholders among them large gold miners
  • The gold mining stock should respond well to a gold price fluctuations

Of course not all criteria must be met. But the more checks can be marked behind the above list the better.

Gold mining stocks from smaller gold miners or prospectors

In this category you will find the stars of tomorrow but also the washouts. Before I will invest in a small gold miner I make sure I will do my homework. Most of them do not make it to my final selection. The lonely ones that will make it also bear a considerable risk but they also will have an abundance of high possible returns in their DNA.

They must have a company history of several years. Then there has to be experienced management available. Adding to that, their financial basis should be solid.

I love to see that some of their stock is held by powerful and experienced parties. But of course the biggest requirement is that they have a high potential for extremely high growth.