Gold mining stocks, often seen as a safe harbor during turbulent times, are now positioned at a fascinating crossroads. The Federal Reserve’s steely determination to rein in inflation might intuitively spell trouble for precious metals. Yet, beneath the surface, multiple factors suggest that the glitter of gold could shine brightly in the near future.
The growing unease and uncertainty in the global markets have reinvigorated the ‘fear trade.’ Investors, wary of market volatility, are turning back to the time-tested reliability of gold. Its intrinsic value and history as a hedge against inflation and economic downturns make it an attractive proposition, especially when financial waters get choppy.
Compounding this shift in sentiment is a noticeable rotation away from high-risk assets, such as cryptocurrencies. As the glitz and glamour of digital gold wane, the allure of tangible gold appears to be on the rise. For those looking to recalibrate their portfolios in these unpredictable times, these specific gold mining stocks may offer a lucrative blend of stability and potential upside.
Headquartered in Denver, Colorado, Newmont (NYSE:NEM) is a powerhouse among gold mining stocks. Per its public profile, Newmont is the world’s largest precious metals mining corporation. Along with the yellow metal, the stalwart mines copper, silver, zinc, and lead. As of this writing, the company carries a market capitalization of $32.38 billion, offering relative stability.
To be sure, stability by itself doesn’t guarantee upside. Since the beginning of this year, NEM fell almost 18%. However, in the trailing one-year period, NEM is down a bit more than 1%, which may egg on the contrarian bulls.
For full disclosure, NEM options expiring in January of next year incur an overwhelmingly bearish tilt. Thus, anything could happen. Still, with so much negative intent, a spark of contrarianism could make Newmont truly fly. What’s important here is that analysts see an upside for NEM, pegging it a moderate buy. Also, the average price target of $52.81 implies nearly 30% growth potential.
Wheaton Precious Metals (WPM)
Wheaton Precious Metals logo close-up on website page. WPM stock.
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An incredibly popular idea among gold mining stocks, Wheaton Precious Metals (NYSE:WPM) deserves a bit of clarification. Before you fire off a letter to the editor, I don’t literally mean that Wheaton is a mining enterprise. Rather, it’s a precious metals streaming company, providing upfront financing to miners in exchange for the right to purchase future metals production at a predetermined price.
Under such an arrangement, Wheaton offers a greater degree of predictability that you simply don’t find among many pure-play gold mining stocks. However, if I’m being perfectly honest with you, no one’s searching for gold streaming stocks; hence the usage of the slightly inaccurate SEO term.
Now, what isn’t inaccurate is that according to Fintel, the three most recent options flow transactions were for bought calls that expire next June at various strike prices. Because these were big block trades – resulting in the payment of significant premiums – it’s likely that they stemmed from institutional investors.
Analysts also appreciate WPM, pegging it a moderate buy with a $58.89 target, implying 36% upside.
Sibanye Stillwater (SBSW)
Person holding smartphone with logo of South African mining company Sibanye Stillwater Limited on screen in front of website. Focus on phone display. Unmodified photo.
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A multinational mining and metals processing firm, Sibanye Stillwater (NYSE:SBSW) is easily the riskiest idea here among gold mining stocks. One of the key reasons of course centers on its volatility. Since the start of the year, SBSW fell 40%. And in the trailing one-year period, it split the difference. But it’s still a heavy dose of red ink at over 20% down.
If that wasn’t bad enough, Sibanye also suffers from labor disputes, which can obviously stymie operations. At the same time, the company is based in resource-rich South Africa. As certain countries become politically unpalatable, South Africa could rise and take center stage. If so, that might bode well for SBSW stock.
Interestingly, although options flow data shows a contested environment among big block traders, the overall sentiment appears net bullish. Specifically. A trader paid a premium of $210,105 to buy Jan. 17, 2025 7.50 calls, which may reflect burgeoning optimism. Lastly, analysts peg SBSW as a moderate buy with a $9.71 price target, implying over 49% upside.
On the date of publication, Josh Enomoto did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
A former senior business analyst for Sony Electronics, Josh Enomoto has helped broker major contracts with Fortune Global 500 companies. Over the past several years, he has delivered unique, critical insights for the investment markets, as well as various other industries including legal, construction management, and healthcare. Tweet him at @EnomotoMedia.
