There has been no ambiguity from Federal Reserve Chair Jerome Powell, as he and the rest of Washington, D.C., over the past 16 months have had to face the music over spiraling inflation and the rampant government spending spree that took inflation to the highest levels in over 40 years. While the searing inflation has fallen from 9.1% to 3.0% on a year-over-year basis, that decline comes after a 5% increase in the federal funds rate over the past year, and there is a good chance we see another 25-basis-point hike at the end of July.
The question for investors is what to do now, especially after a massive market rally this year that has seen the Nasdaq jump 38% and the S&P 500 up almost 20%. One of the best ideas has always been to seek positions in commodities, and the best area for investors to look at are the top gold miners and royalty companies. While gold has exploded higher this week as the worries of an economic and U.S. dollar meltdown continue to build, it still offers investors another chance to grab the glittering bullion.
We screened the BofA Securities gold-mining research universe looking for the top stocks and found six companies that are rated Buy, with some paying quite respectable dividends, and look like great ideas for worried investors now, or those looking to hedge big market gains. It is important to remember that no single analyst report should be used as a sole basis for any buying or selling decision.
Agnico Eagle Mines
This is one of Wall Street’s most preferred North American gold producers. Agnico Eagle Mines Ltd. (NYSE: AEM) is a senior Canadian gold-mining company that has produced precious metals since 1957. It has declared a cash dividend every year since 1983.
Its eight mines are located in Canada, Finland and Mexico, with exploration and development activities in each of these regions, as well as in the United States and Sweden. The company and its shareholders have full exposure to gold prices due to its long-standing policy of no forward gold sales. The stock backed up as gold has sold off March highs and with continued, albeit lower inflation you can bet many savvy portfolio managers are ready to add back top companies like this.
Shareholders receive a 3.04% dividend. The BofA Securities price target on Agnico Eagle Mines stock is $65. The consensus target is $67.49, and shares traded early Thursday at $53.10.
Barrick Gold
This is another top company in the sector, and its stock still offers a very solid entry point. Barrick Gold Corp. (NYSE: GOLD) and Randgold Resources completed their merger on January 1, 2019. This created the world’s largest gold company in terms of production, reserves and market capitalization.
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