It’s no secret that things have gotten a bit heady in the markets. Volatility has returned in a big way. And with the threat of a full-blown trade war brewing, gold and gold stocks are looking pretty good these days. The precious metal managed to finish up 12.8% last year and so far, gold has returned about 2% in 2018. These gains have sent gold prices to the critical $1,350-per-ounce point.
And that’s great news for the various miners.
After suffering with low gold prices for years, the steady climb is great news for the sector’s bottom line. Even more so as many gold stocks continue to see their all-in-sustaining cash costs fall. The difference between the two price points is all profit for the major mining firms.
With prices for the shiny metal still set to rise on the increasing volatility and uncertainty in the world, the gold stocks are sitting pretty in the current environment. That could make them big buys for investors. But which miners should you take a swing at?
Here are five gold stocks to buy today.
Gold Stocks To Buy Today: Barrick Gold Corporation (ABX)
When it comes to gold stocks few have the size and scope of Barrick Gold Corporation (NYSE:ABX).
Barrick managed to produce a staggering 5.32 million ounces of gold last year from a portfolio of premier properties across the globe. Perhaps even better is that record-sized production came with big-time profit boosts from higher gold prices. During its latest reported quarter, ABX announced profits of $1.23 per share. That was good for a 120% jump over what it earned in all of 2016.
However, ABX shares plunged more than 20% last month due to lower production guidance for this year. That big-time drop could be exactly the moment to snag shares of the premier gold stock
For starters, Barrick features a low all-in cost for production — currently $750 per share. That’s a huge boon with gold prices rising. So even though it’ll produce less gold this year, higher gold prices should cancel out the effect. Secondly, ABX continues to reduce its once mighty debt burden — down 19% to just $6.4 billion at the end of 2017. That’s a major win as the firm continues to see higher operating cash flows from higher gold prices.
The positive of a better balance sheet and rising prices/lower costs should continue to benefit ABX shares over the long term. With a P/E of just 10, investors are practically giving one of the premier gold stocks away.
Gold Stocks To Buy Today: Agnico Eagle Mines Limited (AEM)
When it comes to gold stocks, Agnico Eagle Mines Ltd (USA) (NYSE:AEM) has consistently been one of the sectors top-performers. The key is the firm’s stable operating profile.
The firm has eight mines and exploration efforts — all located in politically and safe countries. This includes Canada, Mexico and Finland of all places. Moreover, several of these such as its Malartic mine in Quebec are some of the lowest-cost mines in the world. As a result, AEM’s all-in sustaining cost came in at $804 per ounce. This compares to the industry average of around $870 per ounce. Even better was that this was the sixth year of better-than-expected costs and profits.
Adding in a 25% jump in production and you have a recipe for future success. Which is why AEM could see a higher multiple in future.
Investing in gold these days is all about safety and AEM is one of the safest and steadiest of gold miners around. It’s constant production, dropping cost structure and secure mines should make it a top pick for investors looking to play the market’s current woes.
While it isn’t the cheapest of the gold stocks at a P/E of 39, that premium is warranted and could rise as profits jump.
Gold Stocks To Buy Today: Franco-Nevada Corporation (FNV)
When it comes to all-in costs, Franco-Nevada Corp (NYSE:FNV) leads the way with a big fat $0 per ounce. That’s because FNV doesn’t actually mine for gold — or anything else.
Franco-Nevada is what’s called a royalty and streaming company. It owns gold deposits and allows other miners to produce that gold. The gold stock also provides capital to struggling miners to get the ball rolling at other projects. FNV makes its money by simply collecting fees tied to production for either of these activities — currently at 339 different mines — in various stages of production. The real win is that Franco-Nevada doesn’t really carry the risks associated with rising mine costs, labor relations or environmental issues. But it still benefits when gold rises.
And benefit it does.
Last year, FNV managed to see a record amount of production from its royalty interests, record revenues and profits, as well as managed to pay a record number of dividends. Even better was that the gold stock’s balance sheet continues to be debt free and hold more than $500 million in cash/equivalents. It’s proof that the firm’s streaming focus works wonders.
And with gold prices only going higher, FNV could have another record year on its hands.
Gold Stocks To Buy Today: Yamana Gold (AUY)
When it comes to pure-value gold stocks, Yamana Gold Inc. (NYSE:AUY) could be it. AUY was once one of the sector’s rising stars. However, you wouldn’t know it from its share price — currently under $3. Much of that has to due with the firm’s higher debts. But to be honest, AUY is still the same company as it was before the gold price crash.
The firm has continued to deliver on rising production and lowering its all-in costs. Currently, AUY expects to see gold production rise by a compound annual growth rate of 5.6% over the next few years. Silver should see a huge 37% CAGR in the same time. Meanwhile, all-in cash costs should come in at $820 per ounce. That puts on par with other leaders in the sector.
And yet, investors seem to be throwing it away.
Perhaps even more so when considering that Yamana has a few new mines coming online sooner than later and the rising gold price will allow to realize higher cash flows and continue paying down/fixing its balance sheet.
For investors looking for a big-time value, AUY’s current throw-away share price makes it a compelling buy.
Gold Stocks To Buy Today: VanEck Vectors Gold Miners ETF (GDX)
Perhaps the best strategy when it comes to gold stocks is to buy a bunch of them. Despite the safety in the sector, blow-ups can and do frequently happen when it comes to the miners. Diversifying your holdings in gold stocks makes plenty of sense these days — and the current jump in bullion prices is lifting all boats.
That could make the VanEck Vectors Gold Miners ETF (NYSEARCA:GDX) a big buy.
The $8.9 billion ETF tracks the NYSE Arca Gold Miners Index — aka the “Gold Bugs” index. The index is basically the benchmark for the sector and currently features 50 of the largest gold stocks in the market. That includes giants like previously mentioned Barrick, FNV, and Goldcorp. (NYSE:GG).
GDX was obliterated during the gold rout and its long-term performance has been negative. However, the ETF does do a good job of tracking the trends in rising gold prices and has risen in recent weeks as the economic uncertainty has taken hold. That trend should continue as long as gold makes it way higher. For investors looking for a quick way to capitalize on the trend, GDX is an absolute must.
Expenses for the ETF clock in at 0.51%, or $51 per $10,000 invested annually.
As of this writing, Aaron Levitt did not hold a position in any of the aforementioned securities.
