- Bank of America forecasts a surge in gold prices to $3000 within the next 18 months.
- The yellow metal is already ascending, inching towards fresh all-time highs.
- Dive into four investment pathways (including ETFs and stocks) to seize this shimmering opportunity.
In historical context, gold tends to gleam the brightest between November and February. Nevertheless, despite it being July, the precious metal is on the cusp of touching uncharted territories.
Even with China hitting the pause button on gold purchases, Bank of America remains optimistic, envisioning a soaring trajectory for gold, targeting the $3,000 mark within the next 12-18 months.
Several factors have propelled the metal’s current surge and continue to nurture the bullish sentiment. These factors include:
- Interest Rate Tailwinds: With investors anticipating a rate cut by September and beyond.
- Geopolitical Turmoil: Ongoing tensions in regions like Ukraine and the Middle East injecting market uncertainty, steering investors towards safe-haven assets such as gold.
- Central Bank Diversification: Central banks strategically diversifying their reserves by accumulating gold, diminishing reliance on other assets. Despite China’s recent pause in gold buying, a report from the World Gold Council suggests 20 central banks plan to boost their gold holdings.
- Rising Demand: Gold consumption in countries like India and China remains robust. India’s reserves have hit a two-year high, and China’s real estate downturn is stimulating heightened gold demand.
Although acquiring physical gold remains an option, various other avenues exist to capitalize on the current golden upswing.
Below, let’s delve into four strategies to embrace the gold rally through stocks and ETFs.
Promising Stocks Worth Considering:
1. Agnico Eagle Mines Limited
On May 9, Agnico Eagle Mines Limited (NYSE:) commenced trading at $66.67 with an initial target of $73.18, a milestone it has already surpassed, now hovering near $75.95.
As the third-largest gold producer globally, the company has expanded its reserve base for three consecutive years. While most production is in Canada, it also operates in Finland, Australia, and Mexico.
Agnico Eagle Mines has sustained dividend payments for 32 consecutive years, boasting a dividend yield of 2.14%.
The firm reported robust first-quarter results, with revenues exceeding $1.8 billion and gold production around 880,000 ounces. Notably, its gross profit margin of 56.32% highlights its adept cost management relative to revenues.
Earnings per share (EPS) are predicted to surge by 79.76%, alongside a 22.25% rise in revenue upon reporting on July 31. Moreover, a credit rating boost by Moody’s to BAA1 underlines enhanced financial strength.
The market’s average price target stands at $78.35.
2. Wheaton Precious Metals
Trading at $54.82 on May 9, Wheaton Precious Metals (NYSE:) swiftly met and exceeded its target of $59.10, currently trading at $60.03.
Previously known as Silver Wheaton, the company rebranded on May 10, 2017. Established in 2004 and based in Canada, Wheaton Precious Metals deals in the sale of gold and various precious metals.
With continuous dividend payments spanning 14 years and a yield of 1.05%, the company showcased substantial operating cash flow of $220 million and net earnings surpassing $160 million in the first quarter.
Anticipate further insights upon the release of its quarterly accounts on August 7. The market’s average price target for Wheaton Precious Metals is $65.69.
Optimal ETFs for Maximizing a Potential Gold Rally:
1. VanEck Gold Miners ETF
Established on May 15, 2006, the VanEck Gold Miners ETF (NYSE:) aims to replicate the performance of gold mining companies.
Boasting a net annual expense ratio of 0.51%, the fund offers a dividend yield of 1.38%, with annual payouts ranging from $0.48 to $0.53 per share since 2021.
This highly liquid ETF with a 30-day average daily trading volume surpassing 20 million shares has delivered a return of 7.19% over 5 years and 15.30% in the last year. With investments in 54 companies, the top 10 holdings account for 60%, including industry giants like Newmont Goldcorp, Agnico Eagle Mines, and Barrick Gold.
2. iShares MSCI Global Gold Miners ETF
Formed on January 31, 2012, the iShares MSCI Global Gold Miners ETF (NASDAQ:) consists of gold-related companies.
Managing assets worth $508.9 million and sporting an annual net expense of 0.39%, it pays shareholders $0.19 in dividends semi-annually, featuring a yield of 1.26%.
With an average daily volume of 107,525 shares over the last 20 trading days, over 45% of the ETF’s assets are the top 3 holdings, with the top 10 holdings accounting for 73.34%. Notable constituents include Newmont, Agnico Eagle Mines, Barrick Gold, and Kinross Gold Corp.
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