Canadian investors can consider investing in gold, as the precious metal is viewed as a store of value and a hedge against inflation. In the last 20 years, gold prices have surged over 500%, outpacing the TSX index, which has returned less than 400% in this period.
In the last 12 months, gold prices have risen by 33% due to lower interest rates, geopolitical tensions, and the ongoing trade war. Historically, gold has showcased an inverse relationship with the equity markets, diversifying your portfolio. Moreover, the yellow metal thrives amid periods of economic downturns making it a top investment option amid the escalation of the tariff war between the U.S. and other countries.
One way to gain exposure to gold is to invest in companies that mine the precious metal. In this article, I have identified two gold stocks to consider in the wake of Trump’s tariffs.
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Is the TSX stock a good buy right now?
Wheaton Precious Metals (TSX: WPM) achieved record quarterly operating cash flows of US$254 million in the third quarter of 2024, demonstrating the strength of its streaming business model amid rising commodity prices.
Revenue jumped 38% to US$308 million, with 61% coming from gold, 37% from silver, and the remainder from palladium and cobalt. In the first nine months of 2024, Wheaton produced approximately 450,000 GEOs (gold equivalent ounces) year to date and remains on track to meet its 2024 production guidance of 550,000 to 620,000 GEOs.
“Our portfolio of long-life, low-cost assets delivered another robust quarter,” said Randy Smallwood, president and chief executive officer (CEO), highlighting Wheaton’s ability to maintain strong cash operating margins as it leveraged rising commodity prices.
Wheaton announced two major streaming agreements: a US$100 million expansion to its existing stream on Rio2’s Phoenix project and a US$625 million gold stream on Montage’s Kona project—the largest streaming transaction by a single streamer in nearly a decade. The Kona project is expected to become Wheaton’s second-largest producing asset in its first five years of operation.
Wheaton maintains a strong financial position with approximately US$700 million in cash and a US$2 billion undrawn revolving credit facility. Despite inflationary pressures, Wheaton’s low-cost structure allowed for a nearly 50% increase in quarterly cash flows.
Wheaton forecasts production to increase at an industry-leading rate of approximately 40% to over 800,000 ounces by 2028, driven by growth from operating assets and development projects, several of which are expected to begin production within the next 12 months.
Is the TSX gold mining stock undervalued?
Kinross Gold (TSX: K) delivered a strong fourth quarter, producing 501,000 gold ounces to achieve full-year production of 2.13 million ounces, which is in line with guidance. It reported a record free cash flow of US$1.34 billion for 2024, more than double the previous year, with operating margins increasing 37% compared to a 23% rise in realized gold prices.
Tasiast and Paracatu remained the company’s cornerstone operations, accounting for approximately 1.2 million ounces, or more than half of total production. Tasiast had an exceptional year with record throughput, production of 622,000 ounces at US$681 per ounce cost of sales, and generated record cash flow as the company’s highest-margin operation. Paracatu delivered 529,000 ounces, exceeding the midpoint of guidance, with a cost of sales of US$1,039 per ounce.
“Once again, we achieved our market commitments,” said CEO Paul Rollinson, highlighting a focus on cost discipline with the full-year cost of sales of US$1,021 per ounce and all-in-sustaining costs of US$1,388 per ounce.
Kinross made significant progress on development projects, releasing a preliminary economic assessment for Great Bear that confirmed its potential to produce approximately 500,000 ounces annually at an all-in-sustaining cost of roughly US$800 per ounce.
With its US$1 billion term loan fully repaid and a strong liquidity position of US$2.3 billion, Kinross plans to initiate a share-buyback program later this year while maintaining its quarterly dividend.
Additionally, Kinross has provided production guidance of two million ounces annually through 2027, with costs expected to increase about 10% in 2025 due to portfolio changes and modest inflation of 3-4%. Priced at 19 times forward earnings, Kinross stock trades at an 18% discount to consensus price targets.
