With the U.S. dollar weakening as expectations on the extent of interest rate hikes has moderated, we have seen gold prices rally again.
In the last week, the price of gold has rallied almost 1.5%.
In late 2011, gold prices peaked at close to $1,900 per ounce, then retreated steadily to levels of just over $1,000 per ounce at the end of 2015. Prices are currently at $1,230 per ounce.
There are certainly many questions that remain with respect to where gold is going from here, but one thing is certain: the industry has suffered through a period of record production and declining demand, and in response has worked hard at reducing costs and improving balance sheets, which leaves them well positioned to reap the rewards of rising gold prices.
The price of gold has now rallied more than 4% since September.
So if you believe gold prices will continue to rally, here are three gold stocks to consider.
Agnico-Eagle Mines Ltd. (TSX:AEM)(NYSE:AEM)
AEM is up 11% from its lows that were hit in September, a very good performance relative to the market, which has come down about 5%.
The company’s latest results came in well above expectations as it continues its quest for operational excellence and cost reductions.
Historically, the company has been a consistent top performer, with solid operational performance and an industry-leading cost structure, which has driven consistently better-than-expected results.
At this point, Agnico is on the verge of starting production from two new mines, Ameruq and Meliadine, with estimates for production growth of 31% from 2017 to 2021, according to some analyst estimates. This puts it at the top of the list among gold producers of its size for production growth.
On the risk side, Agnico-Eagle has the lowest political risk profile of its peer group, with gold mines in politically safe areas such as northwestern Quebec, northern Mexico, Finland, and Nunavut, and exploration activities in Canada, Europe, Latin America and the United States.
$12 billion Goldcorp Inc. (TSX:G)(NYSE:G) has seen its shares tumble as its third quarter came in below expectations, but the stock has since partly recovered, and is up 14% since its lows in late October.
While third quarter results were disappointing, we can still expect to see a significant production ramp-up out of its mine in Northern Quebec, and it also has a low risk profile with regard to location of mines as well as debt levels.
Finally, for the investor who is perhaps looking for more risk for the potential of a higher return in the gold space, attractively valued OceanaGold Corp. (TSX:OCG) is a good option.
The stock has rallied 12% year-to-date.
OceanaGold is delivering stellar results, with production grades and recoveries continuing to beat expectations, and although costs have been creeping up, production out of the Haile mine in South Carolina has been ramping up, and this has served to lower the risk profile of the stock.
As the kinks are being worked out at this new mine, it is my belief that we will see strong upside to the stock.
