After trading sideways since early April, gold appears ready to break out and may make a run to test the all-time highs as early as this summer. With the spot price bouncing between $1,700 and $1,750 for over two months, the run through the $1,750 resistance has taken the current price up to Wednesday’s $1,762. Top technical analysts think this could be the breakthrough for the precious metal to challenge the all-time high of $1,917.90 per ounce that was set on August 22, 2011.
With the markets facing a “witches brew” of potential problems, not the least of which includes the coronavirus pandemic, massive social unrest, ongoing hostility in the volatile Middle East, trade-related issues with China and the sheer fact that the stock market is horribly overbought again, we could be in the beginning stages of a major break higher for gold.
One way to hedge another big stock market sell-off would be to buy gold. While the SPDR Gold Shares (NYSEARCA: GLD) is an outstanding vehicle, as you literally buy physical gold, investors may want to invest in some of the top miners and royalty companies. We screened the BofA Securities precious minerals universe looking for companies rated Buy and found six solid choices for investors. It’s important to remember that no single analyst report should be used as a sole basis for any buying or selling decision.
Agnico Eagle Mines
This is one of Wall Street’s most preferred North American gold producers. Agnico Eagle Mines Ltd. (NYSE: AEM) is a senior Canadian gold mining company that has produced precious metals since 1957. Its eight mines are located in Canada, Finland and Mexico, with exploration and development activities in each of these regions, as well as in the United States and Sweden.
The company and its shareholders have full exposure to gold prices due to its long-standing policy of no forward gold sales. Agnico Eagle has declared a cash dividend every year since 1983.
The company’s Meadowbank complex in Nunavutis is expected to achieve commercial production very soon, and the Amaruq project was expected to ramp up to full production by late last year. Amaruq’s gold output is forecast to rise from 130,000 ounces in 2019 to 351,000 ounces in 2021, and it could account for 17% of Agnico Eagle’s total output.
Shareholders receive a 1.30% dividend. The BofA Securities price target for the shares is $72 and the Wall Street consensus target is $69.97. Agnico Eagle Mines stock closed Wednesday’s trading at $61.54.
This is a small-cap gold stock for aggressive investors looking for sector exposure. B2Gold Corp. (NYSE: BTG) is a global, growth-oriented mid-tier gold producer whose primary assets include gold mines located in Nicaragua (La Libertad and El Limon), the Philippines (Masbate) and Namibia (Otjikoto) and Mali (Fekola).
The company recently announced positive drill results from the Mamba zone, which is located within the Anaconda area approximately 20 kilometers from the Fekola Mine, as well as positive infill drill results from the Fekola mineral resource area and step out results north of the Fekola resource.
After the company posted strong first-quarter results, the analysts said this:
B2Gold delivered a strong first quarter earnings result and ended the quarter with net debt of just $17 million, down 86% from year-end 2019. The quarterly dividend was doubled to $0.02 per share, good for an annualized yield of 1.5%; substantial 2020 cash flow is expected. Due to core mine outperformance, 2020 guidance was reiterated despite that the Nicaraguan assets could remain suspended.
BofA Securities has a $6.40 price target, and the consensus target is down at $3.50. The last B2Gold trade on Wednesday hit the tape at $5.35.
This is another top company, and its shares still offer a solid entry point. Barrick Gold Corp. (NYSE: GOLD) and Randgold Resources completed their merger on January 1, 2019. This created the world’s largest gold company in terms of production, reserves and market capitalization.
In the first quarter, gold production and sales were 1.25 million ounces and 1.22 million ounces, respectively. Copper production and sales amounted to 115 million pounds and 110 million pounds, respectively. The average market price for gold was $1,583 per ounce, and the same for copper was $2.56 per pound.