We recently compiled a list of the 10 Best Gold Stocks to Invest in for Portfolio Diversification. In this article, we are going to take a look at where Agnico Eagle Mines Limited (NYSE:AEM) stands against the other gold stocks.
Gold is one asset class that continues to captivate the financial markets, with prices rallying to record highs and showing no signs of slowing down. After powering to record highs of $2,790 an ounce last year, the precious metal is again edging higher, having powered through the $2900 level and on the cusp of the $3,000 psychological level.
The rally to record highs comes against escalating geopolitical tensions and economic uncertainty. While Israel has reached a cease-fire on the Gaza Strip, tensions are far from over with the ever-growing threat from Iran and the ongoing Russia-Ukraine conflict. Similarly, US President Donald has evoked economic uncertainty with a string of trade tariffs that threaten to plummet the global economy into disarray.
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“Central focus of the gold market continues to be the uncertainty in regards to the Trump tariff policies,” said David Meger, director of metals trading at High Ridge Futures.
China’s retaliatory measures against US tariffs are increasingly fueling safe-haven demand, exacerbated by the US threatening to hit Canada, Mexico, and Europe with similar tariffs. The geopolitical tensions and economic uncertainties are why analysts at Citi are optimistic about gold powering through the $3,000 an ounce level amid strong demand as a safe haven in times of turmoil and uncertainty.
As a result of Trump’s tariff threats, which have increased investor anxiety over global growth, trade wars, and high inflation, gold has already reached its seventh-record high this year. Gold’s explosive rally since December, according to Phillip Streible, chief market strategist at Blue Line Futures, may result in a self-fulfilling prophecy of additional price increases, which could cause the research firm to increase its forecast to about $3,250 or $3,500. Analysts at UBS share similar sentiments and expect a gold price rally to persist in 2025 to above the $3,000 an ounce level.
While data from the World Gold Council indicates that gold demand hit record highs of 4,974.5 metric tons last year, the buying momentum is unlikely to stop. Central banks are increasingly purchasing precious metals, which are seen as a solid store of value away from the dollar and other assets susceptible to heightened market volatility. Higher rates lessen the allure of the non-yielding asset, but historically, bullion has been seen as a hedge against inflation and geopolitical unpredictability.
“Gold prices could reach $3,000 this year due to the disruptive nature of the current U.S. administration creating market uncertainty and central banks potentially increasing gold purchases to diversify from U.S. dollar holdings,” Jim Wyckoff, a senior market analyst at Kitco Metals, said.
Gold provides stability during economic turbulence. Its adaptability and timeless appeal have increased its value over centuries. As market uncertainties persist, gold stocks are gaining popularity among investors due to their potential for higher prices and secure store of value.
Our Methodology
To make the list of 10 best gold stocks to invest in for portfolio diversification, we scanned the US market and settled on the top gold companies with significant resource reserves. We then analyzed the stocks and settled on those with solid underlying fundamentals and tremendous potential as long-term investment plays. Finally, we ranked the stocks in ascending order based on the number of hedge fund holders.
At Insider Monkey, we are obsessed with the stocks that hedge funds pile into. The reason is simple: our research has shown that we can outperform the market by imitating the top stock picks of the best hedge funds. Our quarterly newsletter’s strategy selects 14 small-cap and large-cap stocks every quarter and has returned 275% since May 2014, beating its benchmark by 150 percentage points (see more details here).
A macro view of a gold mine, with miners hard at work in the foreground.
Agnico Eagle Mines Limited (NYSE:AEM)
Number of Hedge Fund Holders: 54
Agnico Eagle Mines Limited (NYSE:AEM) is a basic materials company that produces gold through its flagship assets in the US, Canada, Mexico, and Australia. The company also explores copper, silver, zinc, and lead. The stock more than doubled in value last year as it rallied by 109% in response to gold prices gaining more than 30%. Similarly, the stock is trading at all-time highs in response to investors reacting to strong operational results and strategic initiatives that have strengthened its growth metrics.
Agnico Eagle Mines Limited (NYSE:AEM) delivered record-breaking financial and operating results for its third quarter, affirming its operational efficiency amid rising gold prices. With a trailing twelve-month cash flow of $1.88 billion, the company’s ability to sustain high production levels and boost gold sales has led to robust free cash flow generation. Agnico Eagle reported $563 million in free cash flow in the third quarter.
The development of Agnico Eagle’s Detour Lake mine is a key factor in the company’s prospects for future growth. In order to prolong the mine’s life until 2054, the company has revealed plans to boost gold production at this location to 1 million ounces annually by 2030. Because of its advantageous location, pre-existing infrastructure, and the operational team’s experience, Agnico Eagle’s expansion project is considered low-risk and expected to generate significant long-term value.
Additionally, Agnico Eagle Mines Limited (NYSE:AEM) has moved to strengthen its long-term prospects by acquiring O3 Mining. With the acquisition, the company gains access to a key gold asset in the Marban Alliance property. The property is believed to have about 1.7 million ounces of gold.
Overall AEM ranks 2nd on our list of the best gold stocks to buy for portfolio diversification. While we acknowledge the potential of AEM as an investment, our conviction lies in the belief that certain AI stocks hold greater promise for delivering higher returns, and doing so within a shorter timeframe. If you are looking for an AI stock that is more promising than AEM but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.
READ NEXT: 20 Best AI Stocks To Buy Now and Complete List of 59 AI Companies Under $2 Billion in Market Cap.
Disclosure: None. This article is originally published at Insider Monkey.
