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Gold Price Hits Record High: 3 Best Gold Mining Stocks to Buy Now

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Just this morning the price of gold rose to a new all-time high of $2,455 per ounce.

The idea of investing in gold can elicit a wide range of responses from people, from strong vitriol to deep praise. You have the gold bugs on one end, whose portfolios are dominated by the yellow metal, and on the other end you have investing purists, who claim because it has no earnings, it has no place in their portfolio.

As with most things in life and investing, the truth lies somewhere in the middle of those two perspectives.


Gold returns beat stocks, bonds since 2022

Gold has been a store of value for thousands of years, and though it has not made the same long-term returns as US equities, it can in fact be a valuable hedge in a broadly invested portfolio and can add uncorrelated returns during the most challenging periods.

Furthermore, the shiny metal has put up strong returns YTD, outperforming both equities and US treasuries. Even more impressive is its returns since the start of 2022, which also bests the returns of both stocks and bonds.

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Advantages of Investing in Gold Miner Stocks

Going back to the investing purists, who scoff at the idea of investing in a commodity with no earnings, they do make a reasonable point. However, there is one way to both invest in gold, and potentially derive some income.

Gold mining stocks offer the advantage of getting exposure to gold, while also offering an income stream through dividends, which are paid from the profits of running a gold mine.

Of course, they aren’t perfect and it's important to be aware of the risks, including operational challenges and geopolitical factors that can impact mining activities.

I think ideally, if you like the idea of investing in gold, you may have some mix of direct investment in the commodity by investing through the SPDR Gold Shares ETF (GLD - Free Report)  or physical gold, as well as some mining stocks.

Below, I will share three top ranked gold mining stocks investors might consider buying.


Agnico Eagle Mines

Toronto-based Agnico Eagle Mines (AEM - Free Report)  is a gold producer with mining operations in Canada, Mexico and Finland, and exploration activities in Canada, Europe, Latin America, and the United States.

Agnico Eagle Mines currently has a number of compelling bullish catalysts for investors to consider. Over the last month, earnings estimates have snapped higher, boosting the stock to a Zacks Rank #1 (Strong Buy) rating.

FY24 earnings estimates have increased by 40% and FY25 by 36%. Additionally, over the next 3-5 years EPS are forecast to grow at a very impressive 26.6% annually.

Zacks Investment Research
Image Source: Zacks Investment Research

AEM is currently trading at a one year forward earnings multiple of 22.1x. This is well below its 10-year median of 43x and just above the industry average. But as we mentioned, analysts are anticipating EPS to climb significantly higher over the next 3-5 years.

So, based on growth estimates the valuation is likely also at a discount. Agnico has a PEG ratio of 0.8, which is a discount based on the metric.

Finally, it is worth noting that Agnico Eagle mines pays a tidy 2.3% dividend to shareholders.

Zacks Investment Research
Image Source: Zacks Investment Research


Gold Fields Limited

Gold Fields Limited (GFI - Free Report)  is a globally diversified gold mining company headquartered in Johannesburg, South Africa. It is one of the world's largest unhedged gold producers with operating mines in South Africa, Ghana, and Australia.

Gold Fields Limited has been one of the best performing gold mining stocks that I have seen over the last decade. In addition to outperforming the other stock picks shared here, it has even outperformed the S&P 500 over that time.

Because gold and the mining industry can be a cyclical market, it is rare that you see a company like this steadily trend higher like Gold Fields has, and that makes it an especially appealing investment. Clearly, they value long-term returns for investors.

Zacks Investment Research
Image Source: Zacks Investment Research

Gold Fields Limited also has a Zacks Rank #1 (Strong Buy) rating, reflecting upward trending earnings revisions. Over the last month earnings estimates for this year have been revised higher by 22% and estimates for next year have risen by 28%

Gold Fields Limited has a dividend yield of 2.2%.


Harmony Gold

Harmony Gold (HMY - Free Report)  is a South Africa based gold mining company and conducts underground and surface gold mining. It is also engaged in related activities such as exploration, processing, smelting, and refining. Harmony is South Africa's biggest gold producer by volume with production of 1.47 million ounces in fiscal year 2023.

Like the others, Harmony Gold boasts a Zacks Rank #1 (Strong Buy) rating. Analysts have boosted earnings estimates for this year by 17.5%, and 35% for next year.

Harmony Gold has also been the best performing stock of this group YTD, appreciating 67% this year and massively outperforming the underlying commodity. Strong momentum along with the top Zacks Rank makes Harmony Gold a must watch stock.

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Bottom Line

In my own research, I have found that over the long-term, a portfolio allocation to gold of 5%-15% gets you much of the diversification and hedging benefits of owning the commodity. More exposure than that and you may miss out on some of the returns from traditional stocks.

So, for investors who have been prompted to invest in gold by the tremendous momentum seen in recent years, you have good reason to add some of the shiny metal to your portfolio.

Finally, by focusing on the highest quality gold mining stocks, investors have the opportunity to both benefit from the rising price in gold, and a growing business.

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