Breaking News
Investing Pro 0
Ad-Free Version. Upgrade your experience. Save up to 40% More details

3 Gold Stocks to Buy As Inflation Surges

Stock MarketsSep 17, 2021 14:15
Saved. See Saved Items.
This article has already been saved in your Saved Items
3 Gold Stocks to Buy As Inflation Surges

Barrick Gold (TSX:ABX)(NYSE:GOLD) and other gold stocks are the proverbial safe haven. They protect investors from inflation. They calm our fears as we flock to them when uncertainty rises. And most of all, they diversify our portfolios. This is because gold stocks are negatively correlated with most other stocks. In theory, they are the ones that rise when the rest of the market is falling.

Gold stocks: A shelter from uncertainty and inflation Uncertainty is always present. Within the context of stock markets, though, it’s only recognized when enough people are saying it. These days, I do hear many market commentators saying that there’s a lot of uncertainty. But the market is unfazed. The commentators talk about the uncertainty as if it is somehow unique. The fact is that this is not unique. Uncertainty is always there. Therefore, gold stocks should always be a part of your portfolio.

Today, inflation is surging. The inflation rate in Canada hit 4.1% last month. This is a steady rise from the 3.7% the month prior. The last time inflation was this high was in 2003. What happened to gold prices and gold stocks in 2003? You guessed it – this is around the time when gold prices really began to spike. As for gold stocks, they were among the best performers in those years. Barrick Gold stock, for example, rose more than 120% in the following five years.

Agnico-Eagle Mines stock: Operational excellence As a gold stock, Agnico-Eagle Mines (TSX:AEM)(NYSE:AEM) is top-notch. Its operational excellence has driven costs down to industry-leading levels. This, in turn, has boosted the company’s profit and cash flows. On top of this, gold prices have soared recently, resulting in the perfect storm. All of this has allowed the company to raise dividends significantly. In the last five years, Agnico’s dividend has increased by 230%. Its dividend yield is rising nicely and now stands at 2.6%.

So given the macro backdrop, combined with Agnico’s stellar performance, why is the stock trading at 52-week lows? Well, I don’t know for sure. All I know is that it doesn’t make sense. Yes, gold prices have been volatile. This is not surprising given that there’s talk that cryptocurrencies will replace gold as the inflation protection of choice. But I don’t believe this will happen. So we’re left with the facts. Inflation is rising dramatically. Gold is still the best inflation protection we’ve got.

Barrick Gold stock: Investors flock to this stock for gold exposure

Barrick Gold is one of the largest and most well-known gold stocks on the TSX and globally. It’s the go-to stock for gold exposure. At Barrick Gold, cash flows are also rising quickly. Yet Barrick Gold stock is also trading at 52-week lows. Clearly, investors are not believing the gold story or they’re just riding the momentum right now. But all of this means that we have the opportunity to buy these stocks at value levels.

Kirkland Lake Gold stock: A lesser-known stock with big torque Kirkland Lake Gold (TSX:KL)(NYSE:KL) operates in Canada and Australia. This means that it has one of the safest political risk profiles in the gold sector and the mining sector in general. It is, in fact, a huge benefit. The Macassa mine is located in the town of Kirkland Lake, just north of Toronto. It accounts for approximately 30% of total production. This is one of the highest gold grade mines in the world. Kirkland’s mine in Australia is also high grade with strong exploration potential. Kirkland’s mines have well-established infrastructure and access. This has resulted in low costs and strong cash flows.

Additional dividend increases will support this stock as it continues to benefit from strong gold prices.

The bottom line If I’m right, investors will start to flock to gold again as inflation heats up. Therefore, gold prices and gold stocks will rise. Consider buying Barrick Gold stock, Agnico-Eagle stock, and Kirkland Lake stock today while they’re relatively cheap and trading at 52-week lows.

The post 3 Gold Stocks to Buy As Inflation Surges appeared first on The Motley Fool Canada.

Fool contributor Karen Thomas owns shares of Agnico-Eagle. The Motley Fool has no position in any of the stocks mentioned.

This Article Was First Published on The Motley Fool

3 Gold Stocks to Buy As Inflation Surges

Related Articles

ASML Holding Earnings beat, Revenue misses In Q3
ASML Holding Earnings beat, Revenue misses In Q3 By - Oct 20, 2021 - ASML Holding (AS:ASML) reported on Wednesday third quarter earnings that beat analysts' forecasts and revenue that fell short of expectations. ASML Holding...

Unilever margins in spotlight as inflation surges
Unilever margins in spotlight as inflation surges By Reuters - Oct 20, 2021

By Siddharth Cavale (Reuters) - Unilever (LON:ULVR)'s battle with rising costs will take centre stage at its third-quarter results on Thursday, with investors focused on whether...

Add a Comment

Comment Guidelines

We encourage you to use comments to engage with users, share your perspective and ask questions of authors and each other. However, in order to maintain the high level of discourse we’ve all come to value and expect, please keep the following criteria in mind: 

  • Enrich the conversation
  • Stay focused and on track. Only post material that’s relevant to the topic being discussed.
  • Be respectful. Even negative opinions can be framed positively and diplomatically.
  •  Use standard writing style. Include punctuation and upper and lower cases.
  • NOTE: Spam and/or promotional messages and links within a comment will be removed
  • Avoid profanity, slander or personal attacks directed at an author or another user.
  • Don’t Monopolize the Conversation. We appreciate passion and conviction, but we also believe strongly in giving everyone a chance to air their thoughts. Therefore, in addition to civil interaction, we expect commenters to offer their opinions succinctly and thoughtfully, but not so repeatedly that others are annoyed or offended. If we receive complaints about individuals who take over a thread or forum, we reserve the right to ban them from the site, without recourse.
  • Only English comments will be allowed.

Perpetrators of spam or abuse will be deleted from the site and prohibited from future registration at’s discretion.

Write your thoughts here
Are you sure you want to delete this chart?
Post also to:
Replace the attached chart with a new chart ?
Your ability to comment is currently suspended due to negative user reports. Your status will be reviewed by our moderators.
Please wait a minute before you try to comment again.
Thanks for your comment. Please note that all comments are pending until approved by our moderators. It may therefore take some time before it appears on our website.
Are you sure you want to delete this chart?
Replace the attached chart with a new chart ?
Your ability to comment is currently suspended due to negative user reports. Your status will be reviewed by our moderators.
Please wait a minute before you try to comment again.
Add Chart to Comment
Confirm Block

Are you sure you want to block %USER_NAME%?

By doing so, you and %USER_NAME% will not be able to see any of each other's's posts.

%USER_NAME% was successfully added to your Block List

Since you’ve just unblocked this person, you must wait 48 hours before renewing the block.

Report this comment

I feel that this comment is:

Comment flagged

Thank You!

Your report has been sent to our moderators for review
Disclaimer: Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. All CFDs (stocks, indexes, futures) and Forex prices are not provided by exchanges but rather by market makers, and so prices may not be accurate and may differ from the actual market price, meaning prices are indicative and not appropriate for trading purposes. Therefore Fusion Media doesn`t bear any responsibility for any trading losses you might incur as a result of using this data.

Fusion Media or anyone involved with Fusion Media will not accept any liability for loss or damage as a result of reliance on the information including data, quotes, charts and buy/sell signals contained within this website. Please be fully informed regarding the risks and costs associated with trading the financial markets, it is one of the riskiest investment forms possible.
Continue with Google
Sign up with Email