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Forget Costco's Gold Bars: This Miner is Hitting All-Time Highs

It’s no secret that gold is doing well this year.

The shiny metal is outperforming most individual stocks, the broader U.S. indexes, and even Bitcoin. Two major themes are responsible for gold’s ascent.

First, the value of the U.S. dollar against other currencies dropped by about 11% in the first half of this year, the largest decline in more than 50 years. Gold and the dollar normally move in opposite directions; this inverse relationship is vital to understand.

Historically viewed as a hedge against inflation and currency devaluation, precious metals can be a great portfolio diversifier – particularly during times when other asset classes are falling. Seen as a safe haven in times of uncertainty, gold’s recent rise comes as we near the next phase of the easing cycle with the Fed set to cut interest rates next month.

The U.S. dollar went off the gold standard in 1971, and despite some short-term periods of strength, the dollar has been in a long-term downtrend ever since. The U.S. is the world’s largest debtor nation. As U.S. debt and deficits continue to balloon, they exert downward pressure on the dollar.

How to Find Leading Gold Stocks

The best performers are able to adapt their strategies to the current market environment. Similar to an offensive play-caller, these investors successfully adjust to what the other side (the market) is doing by targeting the right industries and executing the proper strategies.

When most stocks are swingy and volatile, employing a strategy that takes advantage of the market dynamic can not only help us navigate these uncertain times – but thrive and outperform. Here at Zacks, we make the process easier for investors by ranking stocks and industry groups, helping narrow down the investment universe to those with the best profit potential.

There are numerous ways to gain exposure to precious metals. While investing directly in metals can be lucrative, decades of market history have shown us that it is far more profitable to own stocks of companies that produce commodities than the commodities they produce.

One of the best ways to target these metals from an investment perspective is to own the stocks of mining companies. These stocks typically outperform the underlying precious metals due to growth in their intrinsic value.

Precious metals do not have the potential for intrinsic value growth as stocks do. The ability of companies to increase their intrinsic value has always enabled stocks to outperform other types of investments. As the intrinsic value of a company grows, the company can increase its production or services which in turn creates more income.

The Zacks Mining – Gold industry group currently ranks in the top 36% of all Zacks Ranked Industries. Because it is ranked in the top half of all Zacks Ranked Industries, we expect this group to outperform the market over the next 3 to 6 months. Historical research studies suggest that approximately half of a stock’s price appreciation is due to its industry grouping. In fact, the top 50% of Zacks Ranked Industries outperforms the bottom 50% by a factor of more than 2 to 1.

Stocks in this industry group remain relatively undervalued and are projected to experience above-average earnings growth. By targeting stocks in the top industry groups, we can dramatically improve our investing success.

Zacks Investment Research
Image Source: Zacks Investment Research

Gold Miner Soars to All-Time High

Miners stand to benefit from higher gold prices and have transitioned into market leaders.

Agnico Eagle Mines (AEM - Free Report) is a Zacks Rank #1 (Strong Buy) stock that has been outperforming the market this year. The company engages in the exploration and production of precious metals including gold, silver, zinc, and copper.

We can see below that AEM stock (shown in green) has been steadily rising this year, even during the nasty correction that occurred earlier in the year. Shares have risen nearly 80% year-to-date, outpacing the SPDR Gold ETF (GLD - Free Report) shown in gold, Bitcoin (in red), and the S&P 500 (in black).

StockCharts
Image Source: StockCharts

Analysts have been revising earnings estimates for Agnico Eagle Mines upward lately. For the current year, estimates have increased 8.1% in the past 60 days. The 2025 Zacks Consensus EPS Estimate now stands at $6.94 per share, reflecting a 64% growth rate relative to the prior year.

Zacks Investment Research
Image Source: Zacks Investment Research

What the Zacks Model Unveils

The Zacks Earnings ESP (Expected Surprise Prediction) indicator seeks to find companies that have recently seen positive earnings estimate revision activity. This more recent information has proven to be very useful in finding positive earnings surprises, giving investors a leg up during earnings season. In fact, when combining a Zacks Rank #3 or better and a positive Earnings ESP, stocks produced a positive surprise 70% of the time according to our 10-year backtest.

AEM is currently a Zacks Rank #1 (Strong Buy) stock and boasts an +1.46% Earnings ESP. Another beat may be in the cards when the company reports its Q3 results in late October.

Keep an eye on this gold producer as the mining group continues to outperform the market.

Disclosure: AEM is a current holding in the Zacks Income Investor portfolio.


See More Zacks Research for These Tickers


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Agnico Eagle Mines Limited (AEM) - free report >>

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