TSX Gold Stocks Could Change Course in 2023: Here Are the 2 Top Bets

What’s next for TSX gold stocks?

| More on:
Gold bars

Image source: Getty Images

The yellow metal has been rising for the past couple of months, and the momentum could continue in 2023. Unlike last year, gold and TSX gold miner stocks might remain in focus due to several supporting factors this year.

Gold and TSX gold miner stocks in 2023

One of them has been the decline in the U.S. dollar. To be precise, the U.S. dollar has dropped nearly 10% since mid-October 2022, and the bullion has gained almost 12% in the same period. Canadian gold miner stocks have rather outperformed the yellow metal since October 2022. So, if you have not invested in the bullion or in the allied areas, this could be the time to buckle up.

The U.S. dollar skyrocketed last year after the Fed rapidly increased its benchmark interest rates. The U.S. Treasury yields turned supremely attractive and attracted capital, making gold lose its sheen.

However, things might reverse to some extent in 2023. The rate-hike cycle might pause or reverse this year if the macro picture somewhat calms. Inflation will likely trend lower, probably in the second half of 2023, which might force central bankers to change their stance.

Gold will likely be the place to go then amid recessionary pressures and easing inflation. Canadian gold miners will move higher due to their higher correlation with the bullion and expected higher earnings growth.

Top two TSX gold stocks

TSX gold miner stock B2Gold (TSX:BTO) is well positioned to benefit from the higher gold prices. It is expected to produce a million ounces of gold in 2022. B2Gold operates high-quality, low-cost mines in Africa and has seen consistent production growth in the last few years. Moreover, it has a strong balance sheet with a debt-to-equity ratio of two.

BTO stock has returned 25% since October and 8% in the last 12 months. Despite the surge, it is trading 15 times its 2023 earnings and looks appealing from a valuation standpoint. It could soar higher, as its quarterly earnings improve amid higher gold prices.

Another pick among TSX gold names is Wheaton Precious Metals (TSX:WPM). It is a streamer and differentiates from conventional miners on a few fronts. Streamers do not own mines but they pay upfront fees to third parties to dig mines against a share in the harvest. Thus, streamers are relatively less-risky options, as they have little or no exposure to operational or political risks.

WPM stock has jumped 30% in the last three months and has notably beaten peer TSX gold stocks. Wheaton has also outperformed conventional miners on the financial growth front in the long term. Thus, WPM trades at a premium valuation and could continue to outperform.

Conclusion

TSX gold stocks look attractive, as markets might keep trading highly volatile in 2023. If central banks change their position later this year, the bullion and miner stocks will likely gain their sheen and regain grace.

This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium service or advisor. We’re Motley! Questioning an investing thesis — even one of our own — helps us all think critically about investing and make decisions that help us become smarter, happier, and richer, so we sometimes publish articles that may not be in line with recommendations, rankings or other content.

The Motley Fool recommends B2Gold. The Motley Fool has a disclosure policy. Fool contributor Vineet Kulkarni has no position in any of the stocks mentioned.

More on Metals and Mining Stocks

stock market
Metals and Mining Stocks

Gold Prices Are Rising: 2 Mining Stocks to Buy Today

Gold mining stocks offer a great way to tap into the resilience of this shiny metal in weak markets, but…

Read more »

A miner down a mine shaft
Metals and Mining Stocks

3 Growth Stocks to Buy With $1,000 Right Now

Each of these growth stocks have climbed over 50% in just six months! And there's still room to grow on…

Read more »

A tractor harvests lentils.
Metals and Mining Stocks

Here’s Why Nutrien Stock Is 1 of my Top Stock Picks This Year

Not all food stocks are equally attractive, and if you are in this for the long haul, it's a good…

Read more »

tsx today
Metals and Mining Stocks

TSX Today: What to Watch for in Stocks on Monday, January 30

Corporate earnings and the Fed’s interest rate decision will remain on Canadian investors’ radar this week.

Read more »

Electric car being charged
Tech Stocks

Is Now The Time to Buy EV Stocks?

EV stocks may be down now, but don't count them out. They'll soon be back up again, so now may…

Read more »

Hands protect a sprout in fertile soil.
Metals and Mining Stocks

Nutrien Stock: How High Could it Go in 2023?

After Nutrien's record 2022 driven by strong pricing power, 2023 should see more of the same, driving the stock much…

Read more »

Gold bullion on a chart
Metals and Mining Stocks

Silver and Gold Stocks: Worth Owning in 2023?

The stock market took a breather from bears as inflation slowed. But recession fears still loom. Should you buy gold…

Read more »

Metals
Metals and Mining Stocks

BUY ALERT: Why I’m Snagging Russel Metals (TSX:RUS) Stock Today

Russel Metals Inc. (TSX:RUS) has started hot in 2023 and boasts nice value and a strong dividend in late January.

Read more »