Understanding ASX gold miners stocks

Sometimes referred to as a ‘hedge’ against inflation, companies in the gold-mining industry are well-loved for their marketplace stability and high returns.

There are two different types of gold investments on the ASX: commodity gold and gold miners. Commodity gold investments, sometimes referred to as metal securities, are investments made in the actual material of gold. Gold mining investments, on the other hand, refer to companies that are mining or producing gold.

Under the Radar Report believes gold mining stocks provide invariable production growth and protection against market weakness.

The benefits of investing in the best gold stocks on the ASX

Investments in gold stocks are a baseline component of many Australian portfolios. They may appear less risky to newer investors and provide substantial returns over time. 

There are many other benefits to investing in gold:

• Outpace inflation: The average cost of living increase in Australia is 4.88%. In contrast, the average rate of return for gold miner investments is much higher — we’ve even seen returns up to 1,200%.

• Constant demand: As gold is a precious and finite resource, there is a constant demand for new materials. As a result, the value of gold continues to rise over time.

• Production growth: Gold miners are constantly growing and exploring, meaning production growth is often high. These companies may perform regular acquisitions as well, boosting the price of your stock.

The best time to invest in small cap gold stocks on the ASX

Gold is a ‘safe haven’ asset for many, meaning investments are a safer bet regardless of temporary market dips. However, timing the market to get a bigger ROI may require deep research and planning.

The best time to invest in small cap gold stocks depends on how you answer the following questions: 

1. How long do you plan on holding your investments? As gold is subject to price volatility in the short run, it may not be the best asset class for every investor.

2. How much do you want to invest? Many investors prefer to use gold stocks to diversify a larger portfolio since going ‘all in’ is a risky market strategy.

3. What is your current risk tolerance? Gold is one of the only asset classes with a hedge against inflation and conflict, and times of economic uncertainty may drive the price back up.

5 highest performing small cap gold stocks on the ASX

Blue chip gold stocks are an important part of balanced portfolios. However, small cap gold stocks may provide additional growth opportunities that aren’t always available with established brands. 

Here are the top small cap gold stocks investors are using to balance out their portfolios:

1. Northern Star Resources (ASX: NST) read more

2. Evolution Mining (ASX: EVN): read more

3. Regis Resources (ASX: RRL)

4. Newcrest Mining (ASX: NCM)

For additional gold miner investment suggestions, refer to our weekly Under the Radar Report.

Learn more about gold stocks on the ASX with Under the Radar Report

As you begin your gold investing journey into the ASX, be sure you’re getting the information you need to make wise, informed decisions. Under the Radar Report has served Australian investors for more than 11 years, and our quality, independent research extends into the mining sector and beyond. 

If you’re interested in exploring small cap gold stocks and creating a high performing portfolio, use our 14-day free trial to see our top picks today.