With The Yellow Metal Priced Higher This Week; Is It Time To Buy Or Sell Mining Stocks?
Gold prices have rallied to new highs this week. And gold mining stocks are one of the best ways to ride on the wave. The attractiveness of investing in mining stocks came to the fore when the gold price reached a historic high of $1,941.9 this week. This time looks different. Instead of a fast reversal that led to the abrupt sell-off, gold prices touched another new high of $1,962 on Wednesday. The big question here is, can it break $2,000 an ounce this week? Or can gold prices sustain at this level for an extended period of time? The weakness of the dollar is the reason most analysts pointed to as to why gold prices rallied this week.
In addition to weak dollars, the impact of the coronavirus pandemic and the uncertainties revolving around the US-China tensions could also be the reasons why gold prices shot higher this week. Some also argued that the shift to safe havens like gold could be an indicator of broader market volatility to come. What if you would like to hedge against the volatility but you know investing in gold can be expensive? Invest in gold miners.
Shares of gold mining stocks have been threading higher recently. For instance, Yamana Gold (AUY Stock Report) soared more than 20% in one month’s time. Although that may seem like a significant gain for mining stocks, it was relatively low compared to its industry peers. From small-cap to large-cap mining stocks, Galiana Gold (GAU Stock Report) to AngloGold Ashanti Limited (AU Stock Report), they were up nearly 30% for the past month. If you are looking beyond bullion, gold mining stocks are currently on fire. But the biggest question is, can these gold mining stocks continue higher?
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Top Gold Mining Stocks To Buy Or Sell: Barrick Gold
Barrick Gold (GOLD Stock Report) has been on a solid uptrend recently and has soared around 60% this year. This is simply because gold prices have also been on the uptrend since mid-2019. High gold prices mean higher earnings for Barrick Gold. The second-biggest gold miner is slated to report their second-quarter earnings on August 10. With the higher gold prices, Barrick Gold is expected to report revenues of $2.9 billion, this marks an increase of 40% higher compared to the same period last year.
Barrick Gold’s operational efficiency and unique set of assets make it stand out among its industry peers. Of course, no one can be certain where the gold price will head next. But a more optimistic outlook for gold paints a strong picture of the company’s growth.
More importantly, its low debt levels provide comfort for long-term investors. However, now that GOLD stocks have rallied more than 60% this year, it’s not surprising that its current valuation could bother some investors.
Top Gold Mining Stocks To Buy Or Sell: Newmont Corporation
Another major mining company that might make it onto the radar of investors is Newmont Corporation (NEM Stock Report). The company will be reporting the second-quarter earnings on July 30. Like other gold miners, the company’s results are likely to have benefited from the surge in gold prices during the quarter. Despite NEM stocks have had a good rally, analysts are still bullish with gold mining stocks, which most agree there’s still room for upside for both gold prices and gold mining stocks.
More money from investors who usually don’t focus on safe-haven like gold appears to be flocking into the sector. And among the gold miners, NEM stock appears to be one of the most attractive gold mining stocks to own. And that simply could be due to the company’s financial headroom. Low leverage and robust cash flows are the characteristics of a company with good management. Not to mention the company has 95.7 Moz in gold reserves.
This implies a reserve life of more than 10 years. Even if the company only proceeds with a small production growth moving forward, the company will still be able to continue to deliver robust cash flows and increasing dividends for the foreseeable future