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Top 3 Gold Mining Stocks to Hedge Against Inflation in 2024

Hannah Perry | October 29, 2024

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3 Top Gold Mining Stocks as Inflation Hedge in 2024

Inflation continues to be a primary concern in the U.S. economy, eroding consumers’ purchasing power. Coupled with current geopolitical tensions and upcoming elections, market turmoil is intensifying. In light of these factors, investors are increasingly seeking out resilient asset classes, like gold, as a safeguard against inflation and market downturns. Therefore, for those looking to hedge against inflation in 2024, it may be prudent to consider three fundamentally robust gold mining stocks: Agnico Eagle Mines Limited (AEM), Barrick Gold Corporation (GOLD), and Kinross Gold Corporation (KGC).

Understanding Inflation Dynamics

As of September 2024, the consumer price index had risen by 2.4% compared to September 2023. Inflation has been a pressing issue since 2022, attributed to factors such as COVID-19, supply chain disruptions, and the ongoing Russian invasion of Ukraine. In response, the demand for metals and minerals has amplified, driven by increasing production activities and advancements in technology. Additionally, as the election season approaches, heightened market volatility is likely, prompting investors to turn towards reliable alternatives like gold.

Gold has long been recognized as a safe haven asset due to its historical stability, price appreciation, and role in jewelry and investment. Recent trends indicate that central bank purchases of gold and its increasing application in technology underscore this asset’s relevance. For instance, central bank net gold buying surged by 6% year-over-year in the second quarter, totaling 183 tonnes, as a means of portfolio protection. Moreover, gold utilization in technology increased by 11% year-over-year, driven by developments in AI. The combination of escalating geopolitical tensions and declining U.S. interest rates further heightens gold’s attractiveness in today’s market.

Agnico Eagle Mines Limited (AEM)

Headquartered in Toronto, Canada, Agnico Eagle Mines Limited (AEM) focuses on the exploration, development, and production of precious metals. Its operations span Canada, Australia, Finland, and Mexico, with additional exploration and development activities in various global regions.

On October 25, AEM announced a strategic subscription to 33,869,939 units of ATEX Resources Inc. at a total valuation of US$40 million. This investment indicates AEM’s historical propensity for equity investment in ventures with high geological potential and provides early-stage exposure to a copper-gold project in Chile. Furthermore, in July, AEM secured a substantial stake in First Nordic Metals Corp., acquiring 29,413,166 common shares.

For the second quarter of 2024, AEM reported a 20.9% year-over-year revenue increase to $2.08 billion, with adjusted net income surging 68.2% to $535.27 million. Analysts predict strong growth for the third quarter, estimating revenues to reach $2.11 billion, a 28.7% increase YoY. With a notable stock surge of 33.8% over the past six months and 78% over the past year, AEM has a POWR Rating of B (Buy), with a particularly strong sentiment grade.

Barrick Gold Corporation (GOLD)

Barrick Gold Corporation (GOLD), also based in Toronto, focuses on the exploration, mine development, and production of gold and copper properties. The company has ownership interests in several producing gold mines across multiple countries.

On October 16, Barrick reported preliminary third-quarter production figures that align with second-quarter results, producing 943,000 ounces of gold and 48,000 tonnes of copper. Noteworthy is the company’s launch of a $2 billion Super Pit project at Lumwana copper mine, expected to bolster its copper output and support long-term growth. The second quarter of 2024 saw revenues for GOLD increase by 11.6% year-over-year to $3.16 billion, with analysts projecting further revenue growth for the third quarter. The stock has increased by 14.8% over the past six months, reflecting an overall POWR Rating of B (Buy) and ranked #10 out of 42 in the Miners – Gold industry.

Kinross Gold Corporation (KGC)

Based in Toronto, Kinross Gold Corporation (KGC) engages in acquiring, exploring, and developing gold properties, operating several mines in North and South America.

On September 10, KGC completed a Preliminary Economic Assessment for its Great Bear project, which aligns with its objective of developing high-margin operations. The project anticipates an annual production of over 500,000 ounces in its initial years, with all-in-sustaining costs estimated at approximately $800 per ounce.

The second quarter of 2024 saw KGC’s metal sales rise 11.6% year-over-year to $1.22 billion, with substantial free cash flow growth. Analysts project an increase of 10.2% in revenue for the third quarter. Over the past six months, KGC’s stock has gained 63.8%, marking a significant recovery period, with a POWR Rating of A (Strong Buy) and ranked #6 in the same industry.

Conclusion

As inflation concerns persist and market volatility rises, investing in gold mining stocks like AEM, GOLD, and KGC could provide stability and potential growth in 2024. Each company has demonstrated strong fundamentals, resilient performance, and promising future prospects, making them worthy considerations for astute investors.