Profiting from investment in gold stocks was like shooting fish in a barrel for much of last year thanks to the rise in the gold price.

Buying any stock as the gold price rose – the average was up from $US1,393/oz in 2019 to $US1,770/oz – was a recipe for easy money.

But 2021 is starting out very differently.

While gold toyed with $US1,950/oz early in the new year, its subsequent retreat to $US1,855/oz has taken the wind out of the sails for the gold stocks, even if the current price ($A2,404/oz) remains comfortably ahead of the last year’s average.

As always, there is a lot of variance in the gold price expectations for the remainder of 2021 from the forecasters that the investors usually turn to for guidance.

But there is agreement on what approach gold stock investors should take. And it might surprise – sell the majors and buy the mid-tiers, regardless of an investor’s stance on the gold price.

It is an emerging theme that Goldman Sachs, a super bull on the gold price with its 2021 forecast for $US2,300/oz, has tapped in to.

“We continue to think the gold sector has been oversold and see opportunities particularly in mid-cap names,” GS said in a recent research note. It has “buys” on St Barbara (SBM, trading at $2.28), Resolute (RSG, 71c) and OceanaGold (OGC, $2.40).

“Our preference for these three mid-cap gold miners is driven by 1) leverage to our bullish near-term gold price forecast, 2) trading at a significant discount to our valuation, 3) potential for near-term production recovery at key assets, and 4) value-accretive organic growth pipelines,” GS said.

All three have “production recovery” issues they need to bag. So they are not without risk. Still, their potential upside from their current prices to GS’s “target” share is enticing stuff – 75% for St Barbara, 83% for Resolute and 58% for OceanaGold.

No guarantees with any of that but worth taking on board given that much of the upside implied by the target prices is largely due to non-gold price factors i.e. things the companies can (or should) be able to control (and put right) themselves.

Hunt through the target price calls by Macquarie for its 18-stock ASX gold sector coverage and it is again the mid-tiers that stand out.

There are eight mid-tiers that Macquarie has plus-20% share price target upside on, even if it has gold falling to below $US1,600 in the next couple of years.

“In (calendar) 2021 we maintain our view that ongoing vaccine roll-outs, enabling a service sector recovery, will lift real yields and put gold under pressure.’’

Against that background, Macquarie nevertheless finds eight mid-tiers with 20% share price target upside potential:

There is a mix amongst that lot of production recovery stories, production growth, merger and acquisition potential, and in a couple of cases at least, exploration upside.

The broader point is that on the whole, the mid-tiers are currently being seen to have more share price upside potential than ASX gold majors which because of their scale, tend to trade higher or lower in keeping with moves in the gold price.

So if an investor is as bullish on gold as GS, by all means stick with the gold majors. But if the investor is gold price agnostic, the mid-tiers could be the place to be as 2021 unfolds.