There was no ambiguity this week from Federal Reserve Chair Jerome Powell, as he and the rest of the Fed governors continue to face the music over spiraling inflation and the rampant government spending spree that has taken and kept inflation at the highest levels in over 40 years. Powell noted on Tuesday that while we have likely entered a disinflationary period, more rate hikes are on the way. This after an increase of a whopping 475 basis points in less than a year.
The question for investors is what to do now? With central banks around the world literally buying gold daily, and the bond market inversion between the 10-year note and the two-year paper suggesting recession is on the way, alternative assets are in demand. One of the best ideas always has been to seek positions in commodities, and the best area for investors to look at now is the top gold miners and royalty companies. The bonus for investors is that while the sector surprisingly has raced higher since early November, a recent backup is offering a much better entry point.
We screened the BofA Securities gold-mining research universe looking for the top stocks. The following six stocks are rated Buy and come with respectable dividends, so they look like great ideas for worried investors now. It is 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 stock has backed up nicely from highs over the past month and is offering one of the best entry points in some time.
Shareholders receive a 3.04% dividend. The BofA Securities price target on Agnico Eagle Mines stock is $61. The consensus target is higher at $65.09, but shares closed on Wednesday at $52.69.
This is another top gold stock, and it still offers 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.
The company holds a 50% interest in the Veladero mine located in the San Juan Province of Argentina; 50% interest in the KCGM, a gold mine located in Australia; 95% interest in Porgera, a gold mine located in Papua New Guinea; 50% interest in the Zaldavar, a copper mine located in Chile; and 50% interest in the Jabal Sayid, a copper mine located in Saudi Arabia.
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