Why AngloGold Ashanti, Iamgold, and New Gold Are Soaring This Week
Inching higher about 1.2% through the first four days of the week, the S&P 500 seems likely to lock in a gain for the first full week of March. There's almost no doubt, on the other hand, that gold stocks are going to end the week sharply higher than where they were at this time last week thanks to the rising price of gold.
According to data provided by S&P Global Market Intelligence, AngloGold Ashanti (NYSE: AU), Iamgold (NYSE: IAG), and New Gold (NYSEMKT: NGD) have climbed 13.5%, 12.4%, and 14.9%, respectively, from the end of trading last week through the market's close on Thursday.
Gold soared to a record high this week
Climbing to an all-time high on Tuesday, the price of gold ended trading priced at $2,141.90. With the price of the yellow stuff rising about 3.5% from the end of last week through the end of trading on Thursday, investors have bid the price of the yellow stuff as geopolitical tension continues to run extremely high in several areas around the world. Believing that gold stocks can fortify their portfolios against market volatility, investors, consequently, have added some luster to their portfolios by picking up various gold production companies.
AngloGold Ashanti, for one, is a leading gold stock. With a $9.3 billion market capitalization, AngloGold Ashanti is one of the largest gold producers available to investors. How significant is the company's gold production? In 2023, AngloGold Ashanti produced 2.6 million ounces, and management expects more of the same in the coming years. At the midpoints of its guidance, management forecasts 2024 and 2025 gold production of 2.69 million and 2.75 million ounces, respectively.
Providing more of a growth option than AngloGold Ashanti, Iamgold also bounced higher this week. Investors have Iamgold on their radars since the company is nearing completion of a new asset: Cote Gold, a gold mine that management believes has the potential to be the third-largest gold mine in Canada. Cote Gold is expected to start operations in 2024 and achieve gold production of 220,000 ounces to 290,000 ounces this year.
Like Iamgold, New Gold represents another growth option. But it's not only growing gold production that mangement foresees -- it also expects to grow profits. In 2024, New Gold forecasts gold production of 310,000 ounces to 350,000 ounces, rising to 410,000 ounces to 460,000 ounces in 2026. During this time period, costs are also expected to decline. Whereas New Gold estimates all-in sustaining costs (AISC) per gold ounce of $1,240 to $1,340, it expects to report AISC per gold ounce of $650 to $750 in 2026.
What should investors do now after the pop in gold stocks?
There's an extremely strong correlation between the movements in the price of gold and those of gold stocks. It's unsurprising, therefore, that investors have been enthusiastic about adding some shimmer to their portfolios by picking up shares of gold stocks. At this point, though, shares of Iamgold and New Gold are trading at a premium to historical valuations, making them look less lustrous than they had seemed previously. AngloGold Ashanti, on the other hand, is sitting in the bargain bin. Shares are valued at 6.1 times operating cash flow compared to its five-year average multiple of 7.2.
It's important to remember, of course, that these stocks aren't the only way to gain exposure to the yellow stuff; gold bugs can always mitigate risk of an investment in an individual company and look to a gold exchange-traded fund (ETF) for exposure to the precious metal.
Should you invest $1,000 in AngloGold Ashanti right now?
Before you buy stock in AngloGold Ashanti, consider this:
The Motley Fool Stock Advisor analyst team just identified what they believe are the 10 best stocks for investors to buy now… and AngloGold Ashanti wasn’t one of them. The 10 stocks that made the cut could produce monster returns in the coming years.
Stock Advisor 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. The Stock Advisor service has more than tripled the return of S&P 500 since 2002*.
*Stock Advisor returns as of March 8, 2024
Scott Levine 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.
Why AngloGold Ashanti, Iamgold, and New Gold Are Soaring This Week was originally published by The Motley Fool
