Gold Stocks May Shine Amid Banking Storm, Fed Conundrum

 | Mar 22, 2023 11:16

  • As the banking storm wreaked havoc in March, even Warren Buffett's company suffered losses, with six of Buffett's 15 biggest losses being in the financial sector
  • Gold and gold stocks are attractive investment options during this time of economic uncertainty and inflation
  • In addition to gold, Franco-Nevada Corporation and Royal Gold are two gold-related stocks worth considering as potential investments

    • The current banking crisis has hit even the biggest names in finance, with Warren Buffett's company bearing losses of $12.5 billion. Six of Buffett's 15 biggest losses this year are in the financial sector. In a period of 10 days, from March 6 to 15, the market capitalization of banks fell by 11.5%.

    In this challenging situation, it's essential to remain calm and consider potentially exciting markets. And, gold and gold stocks are definitely one of them, considering the yellow metal's appeal as safe haven amid the banking crisis in Europe and the US.

    There are several reasons gold could continue to shine this year:

    • In times of economic uncertainty, investors tend to shift from buying stocks to buying gold as a safe haven asset.
    • With inflation higher than usual, investors may also buy gold to protect their capital and minimize the consequent loss of purchasing power due to the rising cost of living.
    • Gold benefits when the dollar weakens due to the inverse relationship between the two assets. If the dollar strengthens, the price of gold tends to suffer, and vice versa.
    • China is the world's largest buyer of gold. As the country's economy recovers, demand for gold will likely increase, potentially driving up its price.

    On January 12, when I first discussed the potential benefits of investing in gold, gold futures opened at $1,879.70. Since then, prices have risen to $2,014.90 and climbed above $2,000 for the first time in over a year, increasing by 6.5% in the past week.

    However, while you can definitely profit by investing in the yellow metal, there are other ways you can profit from rising gold prices; by investing in gold stocks. Here are two gold-related stocks worth considering:

    h2 1. Franco-Nevada Corporation /h2

    Franco-Nevada Corporation (NYSE:FNV) was founded by a Canadian who discovered that the best way to make money was through mining royalties, i.e., the right to receive a percentage of a gold mine's production.