XRP and other cryptocurrencies have been on a big run amid Russia’s invasion of the Ukraine, but before you subscribe to crypto as being the “new gold,” investors should weigh the full extent of the downside risks. Indeed, younger investors, especially those in the millennial cohort, have embraced Bitcoin and XRP as alternatives for gold.
While crypto has been rising steadily higher, it is worth noting that the initial reaction was quite negative, with Bitcoin plunging to around US$34,000 per coin in the early innings of this market correction. While the recovery in crypto has been noticeably sharper, I still don’t think there’s nearly enough data to conclude that XRP or Bitcoin is a suitable substitute for gold. That said, XRP and all the sort may be an additional diversifier that can find a spot within a portfolio that also holds precious metals.
In this piece, we’ll have a closer look at two TSX gold stocks that are not only seemingly cheaper than crypto and their miners, but also can reward investors with dividends over time. So, without further ado, consider Barrick Gold (TSX: ABX)(NYSE: GOLD) and Agnico Eagle Mines (TSX: AEM)(NYSE: AEM). These two intriguing precious metal miners could continue their ascent if gold prices rise above the US$2,000 mark over recent market chaos, ranging from Fed rate hikes to geopolitical tensions.
Barrick Gold
The Oracle of Omaha, Warren Buffett, is no fan of gold. That much is clear. He slammed the asset for being unproductive. With a high-quality gold miner like Barrick, though, investing in gold can be productive. The well-run miner is able to effectively balance capex with returning capital to shareholders. As gold rises, Barrick can be expected to raise the bar on its payout as well. The stock trades at 20.6 times trailing earnings alongside a bountiful 1.7% dividend yield. Shares of the miner are up an astounding 26% year to date and could be in a spot to test highs of around $20 per share.
In any case, the value proposition seems so much better for the likes of a Barrick than an XRP or even Bitcoin, two incredibly volatile assets that won’t pay you for your patience.
Agnico Eagle Mines
Agnico Eagle Mines is another incredibly solid TSX gold stock that’s been on a more modest run this year; it’s essentially flat year to date. The stock trades at 19.9 times trailing earnings with a 3.1% dividend yield. Indeed, Agnico Eagle is a riskier play that could also accompany far greater rewards.
The $30.4 billion precious metals miner is poised to continue its growth as gold prices continue to gain traction after over a year of fluctuations below US$1,900 per ounce. With the $10 billion merger of Kirkland Lake, I now view AEM stock as one of the most intriguing options for Canadian gold bugs seeking great value and safety from broader market volatility.
The bottom line for Foolish investors looking to buy TSX gold stocks over XRP
XRP and Bitcoin have a place in some portfolios. But for those looking to eliminate risk (not add to it), I believe top TSX gold stocks are the better way to go. While both XRP and gold share similar characteristics, gold has a longer track record with less volatility. For that reason, gold shines more than crypto. My favourite way to play it (levered gains and large dividends) are the miners, with Barrick and Agnico Eagle topping the list.
