Inflation is constantly among the major concerns in the U.S. economy, weakening the consumers' spending power. Also, current geopolitical tensions and upcoming elections are spurring further turmoil in the market. Amid this, investors generally incline more towards resilient asset classes like gold to hedge against inflation and market downtrends.
Against this backdrop, investors could consider buying fundamentally sound gold mining stocks Agnico Eagle Mines Limited (AEM), Barrick Gold Corporation (GOLD), and Kinross Gold Corporation (KGC) as an inflation hedge in 2024.
During September 2024, the consumer price index was up by 2.4% as compared to September 2023. The inflation levels have been severely concerning since 2022 because of COVID-19, supply chain restraints, and the Russian invasion of Ukraine.
Amid this, demand for metals and minerals has seen strong growth in recent periods, owing to increasing production activities, improving efficiency through technologies, and rapid economic growth. Also, as the election season is approaching, the market is expected to undergo higher volatility, urging investors to lean towards resilient investment alternates like Gold.
For a long time, gold has remained a safe haven asset for its historical resilience, price appreciation, and use in the form of jewelry and as an investment. Central bank gold purchasing and increasing use of gold in technology are clear indicators of the same.
During the second quarter, Central Bank net gold buying surged by 6% year-over-year at 183 tonnes for portfolio protection and diversification, while gold used in technology jumped 11% year-over-year with recent uptrends in Artificial Intelligence (AI). Also, escalating geopolitical tensions and lower U.S. interest rates are increasing the appeal of yellow metal in the market.
Considering the industry’s conducive trends, let’s delve into the fundamentals of the top three Miners - Gold stocks, starting with the third choice.
Stock #3: Agnico Eagle Mines Limited (AEM)
Headquartered in Toronto, Canada, AEM is engaged in the exploration, development, and production of precious metals. Its mines are located in Canada, Australia, Finland, and Mexico, and they have exploration and development activities in Canada, Australia, Europe, Latin America, and the United States.
On October 25, AEM agreed to subscribe to 33,869,939 units of ATEX Resources Inc. (ATX) at a price of C$1.63 per Unit for a total consideration of US$40,000,000. Each Unit is comprised of one common share of ATEX and one-half of one common share purchase warrant of ATEX.
The investment in ATEX is consistent with AEM’s historical practice of strategic equity investments in projects bearing high geological potential, and it offers AEM exposure in an early-stage copper-gold exploration project in Chile, an established mining jurisdiction.
On July 15, AEM entered into a transaction with First Nordic Metals Corp. (FNM) to acquire 27,954,872 common shares of FNM. After the transaction, AEM owned 29,413,166 common shares of FNM, representing approximately 13.25% of the issued and outstanding common shares.
Also, on June 24, AEM acquired an additional 33,821,842 common shares of Maple Gold Mines Ltd. on June 21, 2024, at a price of $0.085 per common share for a total consideration of approximately $2.87 million from several sellers that acquired the common shares in connection with an offering of flow-through common shares issued by Maple.
The share purchase brought AEM’s holding to 74,674,257 common shares, representing around 19.9% of the issued and outstanding common shares.
During the second quarter, which ended June 30, 2024, AEM’s revenues from mining operations increased by 20.9% from the year-ago value to $2.08 billion. The company’s adjusted net income totaled $535.27 million and $1.07 per share, indicating increases of 68.2% and 64.6% from the prior year’s period, respectively. Its adjusted EBITDA was $1.18 billion, up 32.9% year-over-year.
Furthermore, the company’s free cash flow rose 86.7% from the year-ago value to $557.24 million.
Analysts expect AEM’s revenue and EPS for the third quarter (ended September 2024) to grow 28.7% and 132.7% year-over-year to $2.11 billion and $1.02, respectively. Also, the company has surpassed the consensus revenue and EPS estimates in each of the trailing four quarters, which is impressive.
Over the past six months, AEM’s stock has surged 33.8% and 78% over the past year to close the last trading session at $86.88.
AEM’s bright prospects are reflected in its POWR Ratings. The stock has an overall rating of B, which translates to a Buy in our proprietary rating system. The POWR Ratings are calculated by considering 118 different factors, each weighted to an optimal degree.
AEM has an A grade for Sentiment and a B for Growth. It is ranked #12 out of 42 stocks in the B-rated Miners - Gold industry.
To check additional AEM POWR Ratings for Value, Quality, Stability, and Momentum, click here.
Stock #2: Barrick Gold Corporation (GOLD)
Based in Toronto, Canada, GOLD is in the exploration, mine development, production, and sale of gold and copper properties internationally. It also explores and sells silver and energy materials. The company holds ownership interests in producing gold mines in Argentina, Canada, Côte d’Ivoire, the Democratic Republic of Congo, the Dominican Republic, Mali, Tanzania, and the U.S.
On October 16, GOLD reported preliminary third-quarter production of 943 thousand ounces of gold and 48 thousand tonnes of copper and preliminary third-quarter sales of 967 thousand ounces of gold and 42 thousand tonnes of copper.
The company stated that preliminary third-quarter gold production was in line with the second quarter. Also, a sequential improvement of 23% on continued plant optimization was delivered by Pueblo Viejo, and North Mara had a stronger quarter driven by higher grades.
On October 2, GOLD launched a $2 billion Super Pit project at its Lumwana copper mine, inaugurated by Zambian President Hakainde Hichilema. The Super Pit Expansion is expected to begin construction in 2025. Upon completion, the project will unlock the potential to transform Lumwana into a long-life, high-yielding, top-25 copper producer and a Tier 1 copper mine.
The development could grow GOLD's copper output, strengthen its asset base, and support its long-term growth in the copper market.
GOLD’s revenues for the second quarter, which ended June 30, 2024, increased 11.6% year-over-year to $3.16 billion. The company’s attributable EBITDA grew 30.5% year-over-year to $1.29 billion. Its adjusted net earnings came in at $557 million and $0.32 per share, up 65.8% and 68.4% from the year-ago value, respectively.
Analysts expect GOLD’s revenue and EPS for the third quarter (ended September 2024) to increase 16.6% and 31.4% year-over-year to $3.34 billion and $0.32, respectively. Also, the company topped the consensus EPS estimates in all of the trailing four quarters.
Over the past six months, the stock has surged 14.8% and 18.3% over the past year to close the last trading session at $19.61.
GOLD’s robust outlook is reflected in its POWR Ratings. The stock has an overall grade of B, translating to a Buy in our proprietary rating system.
The stock has a B grade for Sentiment and Quality. It is ranked #10 among the 42 stocks within the B-rated Miners - Gold industry.
Click here to check other GOLD ratings (Growth, Value, Stability, and Momentum).
Stock #1: Kinross Gold Corporation (KGC)
Headquartered in Toronto, Canada, KGC acquires, explores, and develops gold properties. The company operates several mines consisting of the Fort Knox mine and the Manh Choh project in Alaska, the Round Mountain and the Bald Mountain mines in Nevada, the U.S., the Paracatu mine in Brazil, and the La Coipa and the Lobo-Marte project in Chile.
On September 10, KGC completed a Preliminary Economic Assessment for the Great Bear project, which supports its strategy to acquire a top-tier, high-margin operation in a stable jurisdiction with robust infrastructure. The project is expected to produce over 500,000 ounces per year in the initial 8 years, achieving an all-in-sustaining cost (AISC) of approximately $800 per ounce.
During the second quarter that ended June 30, 2024, KGC’s metal sales increased 11.6% year-over-year to $1.22 billion. The company's operating earnings grew 25.4% from the year-ago value to $298.30 million. Also, adjusted net earnings attributable to common shareholders stood at $174.70 million, up 4.2% year-over-year, while its adjusted EPS was $0.14 for the period.
Also, the company’s attributable free cash flow increased 33.9% year-over-year to $345.90 million.
Analysts expect KGC’s revenue and EPS for the third quarter (ending September 2024) to increase 10.2% and 32.4% year-over-year to $1.22 billion and $0.16, respectively. Furthermore, it has topped the consensus revenue and EPS estimates in each of the trailing four quarters, which is impressive.
Shares of KGC have gained 63.8% over the past six months and 72% over the past year to close the last trading session at $8.91.
KGC’s sound fundamentals are reflected in its POWR Ratings. The stock has an overall rating of A, which equates to a Strong Buy in our proprietary rating system.
KGC has a B grade for Quality, Growth, and Sentiment. It is ranked #6 out of 42 stocks in the same industry.
To check other POWR Ratings of KGC for Momentum, Value, and Stability, click here.
What To Do Next?
43 year investment veteran, Steve Reitmeister, has just released his 2024 market outlook along with trading plan and top 11 picks for the year ahead.
AEM shares were unchanged in after-hours trading Monday. Year-to-date, AEM has gained 61.23%, versus a 23.35% rise in the benchmark S&P 500 index during the same period.
About the Author: Rjkumari Saxena
Rajkumari started her career as a writer but gradually shifted her focus to financial journalism, leveraging her educational background in Commerce. Fascinated by the interplay of business and economic shifts in equities, she aspires to evolve as an analyst. With a knack for simplifying complex financial concepts, her mission is to empower investors with insights that lead to profitable decisions.
3 Top Gold Mining Stocks as Inflation Hedge in 2024 StockNews.com
