The gold miners have been steadily recovering in recent weeks, thanks to the run-up in gold prices. If the new year sees falling interest rates, gold may be able to get even more shine. And that could translate to huge moves for the top Canadian precious metal miners, many of which are still off a great deal from their all-time highs hit in the earlier days of the pandemic.
Goldman sees more shine for gold
Recently, investment bank Goldman Sachs (NYSE: GS) was upbeat on the trajectory for the shiny, yellow metal, noting that the “shine is returning.” Indeed, rate cuts aren’t just good for the high-growth tech companies; they may also be a jolt for gold and the top gold miners.
Of course, any analyst projections should be taken with a grain of salt. As top-tier gold miners continue to trade at reasonable multiples, however, I do think the risk/reward is tilted ever so slightly in the favour of longer-term investors. Of course, rates and macro variables can be very difficult to predict. Either way, if you lack precious metals exposure and seek to bring your personal portfolio’s diversification to the next level, going for gold certainly makes a lot of sense right here.
Without further ado, let’s look at two relatively cheap gold miners I find most enticing going into December 2023:
Barrick Gold
Barrick Gold (TSX: ABX) is a shining example (pardon the pun) of a well-managed miner that can reward patient investors through gold bull runs and bearish slumps. The juicy 2.3% dividend yield is nothing to overlook. It’s a great incentive to play the long game with the gold miner. At writing, shares remain off 40% from all-time highs hit back in gold’s brightest moments in 2020. As gold looks to new highs, Barrick stock could have lots of room to gain if we are in for lower rates and what could be another gold rush for investors.
Either way, ABX stock is a rewarding way to play an asset that just sits there and looks pretty. With some of the better operating economics, look for ABX to amplify any gains in gold going into the new year.
Agnico Eagle Mines
Barrick isn’t the only yield-rich way to play precious metals. Miner Agnico Eagle Mines (TSX: AEM) offers a 2.96% dividend yield, making it one of the most bountiful plays in the entire gold-mining scene. If prices in gold rise from here, I think it will be able to stop the stock’s newfound momentum in its tracks. Of course, expenses have been a pressure point, but if gold can keep running from here, such costs aren’t so much of an issue. Indeed, inflation has taken a bite out of most firms these days!
At writing, Agnico Eagle stock looks like the most appealing play through the eyes of passive income investors. If you can get your precious metals exposure alongside a dividend yield of around 3%, I’d say it certainly sounds like a golden opportunity (pardon the pun). So, if you lack any gold exposure, now seems like a great time to prospect the broader basket of miners!
