The Motley Fool

Forget the gold price! I’d buy this FTSE 100 mining stock

The content of this article was relevant at the time of publishing. Circumstances change continuously and caution should therefore be exercised when relying upon any content contained within this article.

Gold bullion on a chart
Image source: Getty Images.

The gold price has surged in recent months. Following this performance, some investors may have bought into the yellow metal ahead of further positive news. 

However, there are other ways to invest in the gold price without buying gold directly. Owning mining stocks, such as the FTSE 100 and FTSE 250 companies listed below, may be the perfect alternative. 

5 Stocks For Trying To Build Wealth After 50

Markets around the world are reeling from the coronavirus pandemic… and with so many great companies trading at what look to be ‘discount-bin’ prices, now could be the time for savvy investors to snap up some potential bargains.

But whether you’re a newbie investor or a seasoned pro, deciding which stocks to add to your shopping list can be a daunting prospect during such unprecedented times.

Fortunately, The Motley Fool UK analyst team have short-listed five companies that they believe STILL boast significant long-term growth prospects despite the global upheaval…

We’re sharing the names in a special FREE investing report that you can download today. And if you’re 50 or over, we believe these stocks could be a great fit for any well-diversified portfolio.

Click here to claim your free copy now!

Gold price play 

Owning mining stocks like FTSE 100 mining group Fresnillo (LSE: FRES) could be a better way to invest in gold without having to buy the yellow metal itself. 

Thanks to the performance of precious metals this year, Fresnillo has earned itself a place in the ranks of the top-performing blue-chip stocks. It is up around 80% year-to-date. If the gold price continues to increase, this trend may continue.

According to its latest trading update, the company produced 26.8m ounces of silver in the first half of 2020 and 381,319 of gold. These figures were slightly below last year’s performance due to disruption caused by the coronavirus pandemic. 

However, the higher gold price should more than compensate for the drop in production. Last year it cost the company around $850 to produce an ounce of gold and around $2 per ounce of silver. At the current gold and silver prices of $1,860 an ounce and $23 per ounce, respectively, it looks as if the business is making a healthy profit on its operations. 

City analysts are forecasting an impressive 25% increase in the company’s earnings per share for 2020, followed by a rise of 57% for 2021. This implies the stock is trading at a forward PEG ratio of 0.7, suggesting the shares may offer a wide margin of safety at current levels. 

What’s more, unlike gold, Fresnillo also offers a dividend. The stock currently supports a dividend yield of 1.1%, which could hit 1.6% next year, according to the City. 


Petropavlovsk (LSE: POG) could be another way to invest in the gold price. Just like Fresnillo, the company has seen demand for its shares surging recently as investor sentiment towards gold mining companies has dramatically improved. 

Its production has jumped this year. According to its latest trading update, gold production rose 42% in the first half of 2020. This timely increasing output will, according to analysts, translate into net income of $164m this year, up from $27m in 2019. 

Based on these projections, the stock is currently dealing at a price-to-earnings ratio of just 7.8 and PEG ratio of 0.3. These numbers suggest the stock offers a wide margin of safety at current levels, which means it could produce high total returns for investors in the years ahead. 

As such, it may be a good idea to buy a share of Petropavlovsk as the gold price continues to rise. It may produce higher returns over the next few years compared to the precious metal as company production continues to increase and costs fall. 

One Killer Stock For The Cybersecurity Surge

Cybersecurity is surging, with experts predicting that the cybersecurity market will reach US$366 billion by 2028more than double what it is today!

And with that kind of growth, this North American company stands to be the biggest winner.

Because their patented “self-repairing” technology is changing the cybersecurity landscape as we know it…

We think it has the potential to become the next famous tech success story.

In fact, we think it could become as big… or even BIGGER than Shopify.

Click here to see how you can uncover the name of this North American stock that’s taking over Silicon Valley, one device at a time…

Rupert Hargreaves owns no share mentioned. The Motley Fool UK has recommended Fresnillo. Views expressed on the companies mentioned in this article are those of the writer and therefore may differ from the official recommendations we make in our subscription services such as Share Advisor, Hidden Winners and Pro. Here at The Motley Fool we believe that considering a diverse range of insights makes us better investors.

Our 6 'Best Buys Now' Shares

Renowned stock-picker Mark Rogers and his analyst team at The Motley Fool UK have named 6 shares that they believe UK investors should consider buying NOW.

So if you’re looking for more stock ideas to try and best position your portfolio today, then it might be a good day for you. Because we're offering a full 33% off your first year of membership to our flagship share-tipping service, backed by our 'no quibbles' 30-day subscription fee refund guarantee.

Simply click below to discover how you can take advantage of this.