2 Gold Miners to Hedge Your Portfolio With

Physical gold, while a strong hedge against market downturns and inflation, can be difficult to invest in and manage. Gold miners offer a decent alternative.

| More on:

Gold is usually the first asset class investors look into when they need to hedge their portfolios against negative market dynamics or inflation, even though there are more contrarian options nowadays (including crypto).

Whatโ€™s ironic is that it might be part of both the cause and the effect when it comes to the gold stocks soaring higher during the pandemic. However, goldโ€™s ability to retain its value is usually the primary catalyst.

But even though gold and gold stocks offer good returns only under specific market conditions, they can still be of great use, even for long-term investors. They can anchor the portfolio during market downturns and prevent it from plummeting.

And if you are amiable to a short-term holding, these stocks can offer better returns in a couple of years than many linear growth stocks in half a decade.

With that in mind, there are two gold miners you should look into.

A mid-cap gold miner

With a market capitalization of $3.4 billion, Vancouver-based Equinox Gold (TSX:EQX)(NYSE:EQX) is a mid-cap gold miner with an entirely Americas-focused portfolio of gold-producing assets. This is somewhat different from larger gold miners, many of which have extensive operations in Africa. It has mines in Canada, the U.S., Mexico, and Brazil.

Another point (apart from a geographically diversified portfolio) in this gold minerโ€™s favour is that the insiders hold a huge number of its shares. This shows the confidence of the people working for/with the company in its profitability and long-term potential. The company also has minimal debt and enough cash/short-term investments to balance out the debt.

It doesnโ€™t pay dividends, but its capital-appreciation potential is quite promising during both troubled and bull markets. The stock saw a steady rise between the end of 2018 and before the 2020 crash (about 180%). After the market crash, the stock rose over 90% in fewer than six months.

A small-cap gold miner

Calibre Mining (TSX:CXB) has been around for a relatively long time, and its stock has seen strong up and down tides in the last two decades. However, the last time the stock traded in double digits was in 2004. Still, it managed quite powerful growth spurts when the market conditions were favourable. In the previous five years alone, it has seen two major and two minor growth phases.

The major growth phases pushed the value up over 170% and 400%, respectively, and the second one took fewer than nine months. The smaller growth spurts were for about 50% and 40%, respectively, and the second one is still going on.

The stock is also quite attractively valued right now, and if itโ€™s anything like its last major growth run, you might consider buying this mid-tier producer.

Foolish takeaway

Not all gold stocks are worth buying only during a market crash. The bull market performance of the two gold stocks above indicates that the right gold stocks can offer adequate growth during healthy markets as well.

Should you invest $1,000 in Equinox Gold Corp. right now?

Before you buy stock in Equinox Gold Corp., consider this:

The Motley Fool Stock Advisor Canada analyst team just identified what they believe are the Top Stocks for 2025 and Beyond for investors to buy nowโ€ฆ and Equinox Gold Corp. wasnโ€™t one of them. The Top Stocks that made the cut could potentially produce monster returns in the coming years.

Consider MercadoLibre, which we first recommended on January 8, 2014 ... if you invested $1,000 in the โ€œeBay of Latin Americaโ€ at the time of our recommendation, youโ€™d have $21,345.77!*

Stock Advisor Canada provides investors with an easy-to-follow blueprint for success, including guidance on building a portfolio, regular updates from analysts, and two new stock picks each month โ€“ one from Canada and one from the U.S. The Stock Advisor Canada service has outperformed the return of S&P/TSX Composite Index by 24 percentage points since 2013*.

See the Top Stocks * Returns as of 4/21/25

This article represents the opinion of the writer, who may disagree with the โ€œofficialโ€ recommendation position of a Motley Fool premium service or advisor. Weโ€™re Motley! Questioning an investing thesis โ€” even one of our own โ€” helps us all think critically about investing and make decisions that help us become smarter, happier, and richer, so we sometimes publish articles that may not be in line with recommendations, rankings or other content.

Fool contributor Adam Othman has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned.

More on Metals and Mining Stocks

GettyImages-1394663007
Dividend Stocks

Recession Stocks Are Back: Consider Buying These Canadian Stocks in May

A recession may or may not come, but no matter what's ahead, investors can prepare with these Canadian stocks

Read more ยป

woman analyze data
Metals and Mining Stocks

1 Magnificent Canadian Stock Down 17% to Buy and Hold Forever

Do you want some value and a deal all wrapped into one? Then this Canadian stock could be for you.

Read more ยป

Dog smiles with a big gold necklace
Metals and Mining Stocks

The Smartest Materials Stock to Buy With $3,700 Right Now

A top-tier gold miner with a strong foundation for growth is the smartest materials stock to buy today.

Read more ยป

woman analyze data
Metals and Mining Stocks

Where Iโ€™d Invest $6,000 in the TSX Today

Here's why Canadian investors should consider holding shares of undervalued TSX stocks such as Allied Gold right now.

Read more ยป

nugget gold
Metals and Mining Stocks

Why Kinross Gold Stock Climbed 4% After Earnings

Kinross stock should continue to do well and already has after some stellar earnings.

Read more ยป

grow money, wealth build
Metals and Mining Stocks

The Smartest Mining Stock to Buy With $5,500 Right Now

Agnico Eagle Mines (TSX:AEM) stock has been hot of late. More gains seem likely for the dividend stock.

Read more ยป

nugget gold
Metals and Mining Stocks

This TSX Gold Stock Down 46% Looks Incredibly Undervalued

Down 46% from all-time highs, Equinox Gold is an undervalued TSX mining stock that offers you significant upside potential rightโ€ฆ

Read more ยป

jar with coins and plant
Metals and Mining Stocks

Where Will Barrick Gold Be in 5 Years?

Barrick Gold stock's trajectory to 2029: Goldโ€™s anchor, copperโ€™s charge in the energy revolution

Read more ยป