Although precious metals-related investments have been relatively disappointing over the trailing two years, the best gold stocks to buy could make a significant comeback due to myriad factors, most notably inflation.
Recently, Treasury Secretary Janet Yellen made a stunning admission, declaring that she misread the threat that rising prices would pose to the economy. This is in regards to her comments from March 2021, when Yellen described inflation as a “small risk.”
Today, though, we know better. Gasoline prices have soared through the roof, while the cost of everything else has also jumped conspicuously. And with wages not keeping pace with the cost spikes, households have few options other than to tighten spending. Naturally, this dynamic poses hardships on companies that depend on strong consumer sentiment, thus raising the specter of mass layoffs.
In fact, several companies have already announced planned reductions in their workforce. Others are approaching the hiring process in a more calculated manner, meaning that the best gold stocks to buy can benefit from the fear trade. Circumstances don’t look too bright, forcing many to seek the universal safe haven.
Since the precious metals mining sector can be incredibly volatile, it pays to focus the bulk of your commodities-focused portfolio on established entities. Under this context, you probably can’t go wrong with Newmont (NYSE:NEM), a company that features the largest gold reserve base in the metals mining industry. As such, acquiring shares of NEM yields far more convenient exposure to gold than lugging around physical bullion.
Better yet, Newmont has been delivering the goods financially. In the first quarter of 2022, it posted sales of $3 billion, up over 5% from the year-ago quarter. Operationally, the company produced 1.34 million attributable ounces of gold and 350,000 attributable gold equivalent ounces from co-products. Just as significantly, management stated that it’s on track to achieve full-year guidance ranges.
Overall, NEM is up more than 9% on a year-to-date (YTD) basis and appears to be working through prior volatile sessions. For a combination of strong fundamentals and capital gains potential, NEM is one of the best gold stocks to buy for fighting inflation.
Barrick Gold (GOLD)
How to Play Barrick Gold Stock Ahead of Today's Earnings
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Commanding a market capitalization of nearly $37 billion, Barrick Gold (NYSE:GOLD) is a powerful and influential player in the mining industry. Barrick has operating sites in 18 different countries, enabling shareholders to enjoy a diversified footprint. In addition to its namesake asset, the company is a major copper producer, a metal that has significant implications for the future, particularly if electric vehicles become widely integrated.
In its Q1 earnings report, Barrick reported revenue of $2.85 billion, down more than 3% from the year-ago level. According to the company’s financial disclosure presentation, it suffered a depletion of higher-grade ore due to a mechanical mill failure. As well, Barrick suffered from higher energy prices and global supply challenges due to Russia’s invasion of Ukraine.
Still, these might be temporary setbacks. Notably, management disclosed that Barrick’s gold production would probably be weakest in Q1. Most critically, it stood by its 2022 guidance for gold and copper production. Therefore, investors should be able to trust GOLD as one of the best gold stocks to buy.
Gold Stocks to Buy: AngloGold Ashanti (AU)
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An independent global gold mining firm, AngloGold Ashanti (NYSE:AU) was formed in 2004 by a merger between AngloGold and the Ashanti Goldfields Corporation. Currently, the producer of the precious metal has 16 operations covering four continents, making it a formidable player among the best gold stocks to buy to fight inflation.
Still, AngloGold has been going through a rough patch recently, making it one of the riskier ideas in the segment. On a YTD basis, AU has dropped more than 17%, which is slightly worse than the performance of the benchmark S&P 500 during the same period. Not helping matters was a rather disappointing year in 2021, with the company generating sales of $4 billion, down 9% against 2020’s result.
However, circumstances are improving for AngloGold. In Q1 2022, the mining firm produced 588,000 ounces of gold, matching the year-ago quarter’s output. However, the gold price received per ounce in the most recent quarter was over 5% higher year-over-year (YOY). Therefore, AU is in a better position to attract speculative interest.
Agnico Eagle Mines (AEM)
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One of the top-tier names in the precious metals sector, Agnico Eagle Mines (NYSE:AEM) tends to fly under the radar relative to other companies classified as the best gold stocks to buy. Presently, Agnico has a market cap of slightly over $24 billion, providing stability in an often-choppy market segment.
Overall, AEM stock is basically flat since the beginning of January. That might change, though, since Agnico has been bringing home the goods. In Q1 of this year, the mining firm rang up $1.3 billion in sales, up almost 40% YOY. According to the company’s press release, its payable gold production amounted to 660,604 ounces.
Furthermore, management reported that several key cornerstone assets delivered strong operational performance in Q1. If inflation continues to wreak havoc on the company, the implication is that Agnico will be a huge beneficiary from possibly higher gold prices. Therefore, keep AEM on your list of the best gold stocks to buy.
Gold Stocks to Buy: Gold Fields (GFI)
a precious metals mining operation
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Though most of the major gold-mining firms feature similar fundamentals — and therefore technical performances — Gold Fields (NYSE:GFI) has been an anomaly this year. On a YTD basis, GFI is down 13%, with the pain coming just before Memorial Day weekend.
As Bloomberg reported, GFI shares tumbled after the issuing company agreed to buyYamana Gold (NYSE:AUY) for $7 billion in an all-stock deal. It would make Gold Fields the world’s fourth-biggest gold producer, which in theory bodes well for GFI. However, it’s possible that investors thought dimly about companies making aggressive acquisitions during a rough economic cycle.
Nevertheless, over the long run, GFI could still be one of the best gold stocks to buy because the deal appears to be a good one. With Yamana being Canada’s biggest gold mine, GFI would command an impressive footprint. As well, Canada is one of the most jurisdictionally stable regions of the world, which must be taken into account under the current geopolitical paradigm shift.
Wheaton Precious Metals (WPM)
Wheaton Precious Metals logo close-up on website page. WPM stock.
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While the image of the best gold stocks to buy tends to conjure up metals producing firms, Wheaton Precious Metals (NYSE:WPM) instead adopts a streaming business model. Under this setup, Wheaton secures a share of future production at a predetermined discounted price in exchange for capital. Therefore, streaming firms enjoy greater cost predictability than pure metals producers, which may be subject to the whims of the free market.
One of the better performing gold stocks during the early part of the new normal, Wheaton has encountered some headwinds this year, slowing its performance to a loss of 1% YTD. In Q1 2022, it posted revenue of $307 million, down over 5% against the year-ago quarter. In gold equivalent ounces, it produced 171,367 ounces, down 13% YOY.
Still, investors shouldn’t give up on WPM stock. Management reported that in Q1, Wheaton added two new streams and increased its interest in a pre-existing stream. Therefore, if inflation rears its ugly head — and it is a likely scenario — WPM stock could easily benefit.
Gold Stocks to Buy: Sibanye Stillwater (SBSW)
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I don’t want to sugarcoat it. The reason I stuck Sibanye Stillwater (NYSE:SBSW) last on this list of the best gold stocks to buy to fight inflation is that, in my view, it’s the riskiest. At a time when distractions are seriously unwanted, Sibanye Stillwater has a massive one in the form of a $1.2 billion claim that it withdrew from a transaction in an unacceptable manner.
Diving into the granularity of a legal matter tends to be a fool’s errand so I’m not going to play. But that’s not the only issue with the company. Workers have been striking at the firm’s gold mines located in South Africa, presenting huge operational concerns as well as potential reputational damage.
So, why bother with SBSW stock? Well, the underlying company has a strong position in platinum and palladium.
Indeed, with Russia out of the global supply chain loop, demand for these metals will likely swing higher because of supply disruptions. Moreover, they undergird automotive production, being a critical component of catalytic converters. Since EV integration will take time, SBSW stock finds itself exceptionally relevant despite the troubles.
On the date of publication, Josh Enomoto held a LONG position in gold. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
