As we navigate through a year marked by a notable 16.5% rally in gold and an even more impressive surge in silver, it becomes clear that precious metals are not just preserving wealth but actively creating it. Investors have two main avenues to capitalize on this bull market: holding physical metals or investing in precious metals stocks. Given the ongoing geopolitical tensions and central banks’ increased gold reserves, the outlook for gold and silver remains bullish over the next 12 to 18 months. Expectations of multiple rate cuts suggest a weakening dollar, which historically benefits precious metals. With this backdrop, let’s delve into three precious metal stocks that present attractive buying opportunities.
Barrick Gold (NYSE: GOLD) – Poised for Growth and Yield
Barrick Gold, another stalwart in the sector, has also remained relatively flat over the past year but has shown signs of an uptrend recently. With a dividend yield of 2.24%, Barrick is not just a play for appreciation but also for income. The company has ambitious plans to increase its gold equivalent production to seven million ounces by 2030, a 30% increase from current levels. Coupled with an anticipated decrease in the all-in-sustaining cost of gold production, Barrick is well-positioned to leverage higher gold prices for significant free cash flow, facilitating further growth and generous capital returns.
Hecla Mining (NYSE: HL) – Silver Lining with Robust Growth
Hecla Mining stands out as the largest silver miner in the U.S., with its stock benefiting from the recent rally in silver prices. Looking ahead, Hecla aims to increase its silver production from 14.3 million ounces last year to 20 million ounces by 2026. This increase in production, aligned with higher silver prices, is expected to drive strong cash flows and dividend growth. Furthermore, Hecla’s recent acquisition of ATAC Resources in Canada, adding a substantial land package to its assets, underscores its growth strategy and enhances its financial flexibility.
Newmont (NYSE: NEM) – A Golden Opportunity Awaits
Despite gold’s upward trend, Newmont’s stock has experienced a period of consolidation over the last 12 months. This stagnation may be seen as a golden opportunity to accumulate shares at a forward P/E of 13, alongside a 2.25% dividend yield. With gold prices expected to sustain levels above $2,500 an ounce, NEM’s stock could potentially double by the end of 2025. Newmont boasts 128 million ounces of gold reserves and 155 million ounces of resources, ensuring profitable production deep into the 2040s. The company’s robust financial health, exemplified by its Q1 2024 operating cash flow of $1.1 billion, positions it well for aggressive capital investments and promising shareholder returns through dividends and share repurchases.
As precious metals continue to gain traction amidst a favorable macroeconomic environment, these three stocks offer a strategic blend of growth, stability, and income, making them compelling additions to any investment portfolio looking to harness the potential of the ongoing commodities rally.
