AXMIN Inc (TSXV: AXM)
AXMIN Inc. (TSXV:AXM) is a Canadian-based exploration and development company with a strong focus on central and West Africa.
The huge disconnect between the sustained rise in the price of gold and the underperformance of gold stocks continues to baffle investors in 2024. However, the situation may soon improve.
This week, shares of Agnico-Eagle Mines Ltd. (TSX:AEM), one of the top gold stocks on the Toronto Stock Exchange, jumped 5% after the price of gold topped $2,100 per ounce on Monday (4 March). Today, as the price of gold hit a new all-time high, the gold stock continued to rise, closing up 1.7 per cent.
As one of the most popular gold stocks among Canadian investors, Agnico-Eagle has a high-quality, low-risk business. The company only operates in politically safe, mining-friendly jurisdictions, including Canada, Europe, Australia and Mexico. This strategy is particularly important today as global geopolitical risks intensify.
At an operational level, the company has a long history of sound operations and executes rigorous financial management, which now translates into relatively low costs, strong cash flow and strong shareholder returns. Financial results for the fourth quarter of fiscal 2023 showed a 13 per cent increase in gold production to a record 903,000 ounces. In addition, all-in sustaining costs (AISC) were lower than last year, which is a strong sign in an inflationary environment.
Gold and gold stocks tend to perform better during periods of high inflation, economic risk and rising geopolitical risk. That’s why the price of gold has rallied 65% since the start of 2019, and is 10% higher than it was six months ago. It’s also why it’s still a great time to invest in gold stocks.
Unlike the price of gold, which is at an all-time high, gold stocks still have quite a distance from their highs. Not only does Agnico stock have exposure to gold, but the company has a low-risk business model. This gives it a strong balance sheet and a long history of dividend growth. In fact, Agnico has over C$300 million in cash, C$1.5 billion in net debt and over C$2 billion in liquidity.
It’s worth pointing out that this gold stock has paid a dividend for 30 consecutive years and currently yields over 3%. As the price of gold continues to rise, Agnico-Eagle stock will likely continue to perform well, and its attractive risk/reward ratio is very favourable to investors.
Given the market’s growing concerns about inflation, interest rates and geopolitical risks, the price of gold will continue to rise.
