If you’re looking to profit from gold, one potential strategy is to invest in gold stocks. Gold stocks tend to be leveraged plays on the price of gold, meaning that when gold is moving higher, they can generate fantastic returns.
In the UK, there are many gold stocks listed on the London Stock Exchange (LSE). Whether you’re looking for a large-cap FTSE 100 gold miner or an under-the-radar small-cap gold explorer, you have plenty of options. Here, I’ll provide a concise overview of some of the main UK gold stocks.
Large-cap UK gold stocks
In the large-cap area of the UK stock market, there are a few companies that produce gold. One of the major players is FTSE 100 firm Polymetal International. It’s a top-10 global gold producer with a market capitalisation of £7.7bn.
Also in the FTSE 100, there’s Antofagasta and Fresnillo. Both of these companies produce gold, however, it is not the main commodity they focus on. Antofagasta’s primary focus is copper, while Fresnillo’s is silver.
Mid-cap LSE gold miners
In the mid-cap area of the market, there are a number of companies that are engaged in the mining of gold. One of the best known mid-caps is FTSE 250 gold miner Centamin. It’s focused mainly on mining gold in Egypt and has a market cap of nearly £2bn.
Other UK gold stocks in the mid-cap arena include Petropavlovsk and Highland Gold Mining, which are both focused on mining gold in Russia. There’s also Hochschild Mining, but it has a large focus on silver.
Small-cap gold stocks
It’s the small-cap space that offers UK investors the most choice when it comes to gold stocks. In this area of the market, there are lots of gold stocks. Many of these are listed on the LSE’s Alternative Investment Market (AIM).
Some of the best known small-cap UK gold stocks include:
SolGold, an Australian gold and copper mining company.
Greatland Gold, which is focused on gold mining in Australia.
Pan African Resources, a mid-tier Africa-focused producer.
Chaarat Gold Holdings, which operates in the Kyrgyz Republic.
Shanta Gold, which focuses on gold in Tanzania.
Trans-Siberian Gold, which has a portfolio of gold assets in Russia.
All of these small-caps have a market capitalisation of at least £50m.
What you need to know about UK gold stocks
Of course, before investing in gold stocks, it’s important to understand the risks. One thing you should know about such stocks is that they tend to be volatile. While they can deliver strong returns when gold is rising, they can also deliver big losses if gold is falling.
I’ll also point out that gold mining is a complex business. There are many things that can go wrong. This means that gold stocks don’t always rise when the gold price is rising.
If you’re thinking about investing in UK gold stocks, my advice is to focus on risk as well as return. Spreading your capital over a number of different stocks is generally a smart strategy.
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Edward Sheldon has no position in any shares 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.