Gold prices have declined more than 4% so far this week due to rising Treasury yields. Before this decline, the precious metal has impressively rallied. Gold has been the perfect asset for the weak economy, uncertain political and economic environment, and considerable amounts of stimulus as it benefits from rising inflation expectations and lower rates…
In recent days, there’s been increasing optimism that a credible vaccine will be available by year-end, and the economy is doing better than expectations. This has led to selling pressure in safe havens like gold. Still, gold has risen more than 28% so far this year. If the economy underperforms, and the government pushes out more stimulus, then prices will likely increase.
A rise in gold prices directly benefits gold miners by helping them generate higher profits, especially as gold prices are above miners’ costs currently. Many gold miners also pay dividends, which will reward investors if gold trades sideways for an extended period before making new highs.
The temporary setback for the precious metal could be a good opportunity to enter gold mining stocks like Barrick Gold (GOLD), Franco-Nevada Corporation (FNV), Agnico Eagle (AEM), and Royal Gold (RGLD).
Barrick Gold Corporation (GOLD)
GOLD mines and markets, both gold and copper. The company has exploration activities in Canada, Australia, the US, Peru, and other countries. Recently, the company entered into a joint venture with Newmont Goldcorp to develop eight gold assets in the Nevada region.
Due to a stellar second quarter, the company has increased its dividend by 14%. It distributes an annual dividend of $0.28, which translates to a dividend yield of 1.1%.
In the second quarter, net earnings have increased to $357 million from $194 million a year ago. Free cash flow has also been increased to $522 million compared to $55 million a year ago.
GOLD’s earnings surprise history is impressive as well with the stock meeting or beating consensus EPS estimates in each of the trailing four quarters.
GOLD has also been performing pretty well along with rising gold prices amid the uncertainties, and it has added close to 73% to its stock price since this year’s low of $15.1 hit in March due to the virus-driven market crash.
How does GOLD stack up for the POWR Ratings?
A for Trade Grade
B for Buy & Hold Grade
A for Industry Rank
B for Overall POWR Rating
You can’t ask for better. The stock is also ranked #2 out of 30 stocks in the Miners – Gold industry.
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