Is It Time for Gold Stocks to Shine?

Investors can consider buying gold mining stocks such as Barrick Gold if they believe precious metal prices will surge higher.

| More on:

You’re reading a free article with opinions that may differ from The Motley Fool’s premium investing services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

Generally, gold prices and interest rates have an inverse relationship. It suggests when interest rates rise, gold prices will experience a pullback and vice versa. However, in the last year, despite the steep hikes in bond rates, gold prices have gained momentum. Let’s see why.

Gold is viewed as a safe haven asset and the go-to investment during periods of economic turmoil and geopolitical tensions. In the last 18 months, the threat of a global recession and Russia’s invasion of Ukraine have both acted as tailwinds for gold prices.

The precious metal is also an inflation hedge and maintains its intrinsic value when fiat currencies face the threat of devaluation. As inflation touched multi-year highs in 2022, investors have expectedly flocked towards gold.

Moreover, countries such as China have increased gold reserves considerably to reduce their dependence on the U.S. dollar. Now, with interest rate hikes coming to an end, it’s quite possible for the yellow metal to gain pace in the next 12 months.

Here are two top gold mining stocks you can consider buying right now if gold prices surge higher.

Barrick Gold stock

Valued at a market cap of $35 billion, Barrick Gold (TSX:ABX) is one of the largest gold miners globally. It focuses on operating Tier 1 mining assets, which are basically large mines with significant remaining resources.

Created with Highcharts 11.4.3Barrick Gold + Wheaton Precious Metals PriceZoom1M3M6MYTD1Y5Y10YALL2 Jan 202327 Sep 2023Zoom ▾Feb '23Mar '23Apr '23May '23Jun '23Jul '23Aug '23Sep '230www.fool.ca

Barrick Gold aims to produce 6.5 million ounces of gold equivalent each year through 2032. Investors should note that these estimates also include copper production.

The company’s top-tier mining portfolio is backed by a strong balance sheet. In the last few years, Barrick Gold has decreased its balance sheet debt considerably, shielding it from recent interest rate hikes.

Moreover, the sale of non-core assets has further strengthened its financials while consistent cash flows allow it to pay shareholders an annual dividend of $0.61 per share, indicating a yield of almost 3%.

Priced at 12.8 times forward earnings, Barrick Gold stock is very cheap, given its adjusted earnings are forecast to rise by 18% in 2023 and 31% in 2024. Analysts tracking ABX stock expect it to surge over 50% in the next 12 months.

Wheaton Precious Metals stock

Wheaton Precious Metals (TSX:WPM) is a royalty company, which means it provides capital to gold miners in exchange for purchasing the mined commodity at a lower price in the future. It then sells the commodity at a profit and recycles the proceeds to fund additional mining operations.

Wheaton generates a majority of its revenue from precious metals such as gold and silver. So, similar to traditional mining companies, its performance is also tied to commodity prices.

But unlike miners such as Barrick Gold, Wheaten enjoys an asset-light business model and is primarily a financial partner. In the last 10 years, WPM stock has returned 151% to shareholders in dividend-adjusted gains. Comparatively, the TSX index has returned 114% since September 2013.

The company currently offers shareholders a forward yield of 1.5%, and dividends have more than doubled in the past decade.

Priced at 35 times forward earnings, WPM stock might seem expensive. But analysts remain bullish and expect shares to surge close to 40% in the next 12 months.

Should you invest $1,000 in Barrick Gold right now?

Before you buy stock in Barrick Gold, consider this:

The Motley Fool Stock Advisor Canada analyst team just identified what they believe are the Top Stocks for 2025 and Beyond for investors to buy now… and Barrick Gold wasn’t one of them. The Top Stocks that made the cut could potentially produce monster returns in the coming years.

Consider MercadoLibre, which we first recommended on January 8, 2014 ... if you invested $1,000 in the “eBay of Latin America” at the time of our recommendation, you’d have $21,058.57!*

Stock Advisor Canada provides investors with an easy-to-follow blueprint for success, including guidance on building a portfolio, regular updates from analysts, and two new stock picks each month – one from Canada and one from the U.S. The Stock Advisor Canada service has outperformed the return of S&P/TSX Composite Index by 38 percentage points since 2013*.

See the Top Stocks * Returns as of 2/20/25

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.

Fool contributor Aditya Raghunath has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.

Confidently Navigate Market Volatility: Claim Your Free Report!

Feeling uneasy about the ups and downs of the stock market lately? You’re not alone. At The Motley Fool Canada, we get it — and we’re here to help. We’ve crafted an essential guide designed to help you through these uncertain times: "5-Step Checklist: How to Prepare Your Portfolio for Volatility."

Don't miss out on this opportunity for peace of mind. Just click below to learn how to receive your complimentary report today!

Get Our Free Report Today

More on Metals and Mining Stocks

A plant grows from coins.
Metals and Mining Stocks

3 Gold and Silver ETFs for Tariff-Wary Investors

These gold and silver funds can help you diversify cheaply.

Read more »

The TFSA is a powerful savings vehicle for Canadians who are saving for retirement.
Dividend Stocks

The Best Canadian Dividend Stocks to Buy and Hold Forever in a TFSA

TFSA investors can avoid the need to fly to safety during market turns by owning the best Canadian dividend stocks.

Read more »

Safety helmets and gloves hang from a rack on a mining site.
Metals and Mining Stocks

Best Stock to Buy Right Now: Barrick Gold vs Agnico Eagle?

Agnico-Eagle Mines stock continues to soar off of strong results while Barrick Gold grapples with political troubles in its African…

Read more »

A close up color image of a small green plant sprouting out of a pile of Canadian dollar coins "loonies."
Stocks for Beginners

What to Know About 2 Canadian Mining Stocks for 2025

Mining stocks can be a strong investment, or a bit of a wild ride. So where do these two top…

Read more »

nugget gold
Metals and Mining Stocks

2 Gold Stocks to Consider in the Wake of Trump Tariffs

Investing in gold mining stocks such as Kinross can help you diversify your portfolio and lower overall risk.

Read more »

Metals and Mining Stocks

Value Hunters: It’s Time to Snap Up These TSX Gems

Investing in undervalued gems such as MAG Silver should help you beat the broader markets in 2024 and beyond.

Read more »

A plant grows from coins.
Stocks for Beginners

3 Top Basic Materials Sector Stocks for Canadian Investors in 2025

These three Canadian stocks certainly have a strong future ahead, and now might be time to buy the dip.

Read more »

todder holds a gold bar
Stocks for Beginners

Outlook for Barrick Gold Stock in 2025

Gold stock Barrick may have proven itself in the past, but with geopolitical issues on hand, should investors move elsewhere?

Read more »