Gold is having its moment in the spotlight. Geopolitical turmoil and the threat of trade wars have driven investors towards gold as a safe-haven asset. With the price of gold approaching a historic high of nearly $3000 per ounce in 2025, marking a nearly 50% increase year-on-year, gold miners should seemingly be enjoying record profits.
However, shares of Canadian gold giant Kinross Gold Corporation (KGC) fell by 6.8% after releasing its fourth-quarter earnings for 2024. This disconnect raises a key question: Is this drop a buy opportunity for this gold stock, a signal to hold, or a signal to sell?
Kinross Gold has not only survived this gold rush but has also thrived financially. The company generated an astonishing $1.3 billion in free cash flow in 2024, more than double that of 2023.
Despite strong operational performance, the market seems to undervalue Kinross Gold’s stock. With a P/E ratio of 10.2, significantly lower than the industry average of 49.6, there is potential for Kinross Gold’s stock price to rise if market sentiment shifts. Additionally, management’s plan to resume stock buybacks later in 2025 could reduce the number of shares outstanding and restore investor confidence, potentially benefiting the stock price.
Kinross Gold sold gold at an average price of $2663 per ounce in the fourth quarter of 2024, and the price of gold continues to climb. Even maintaining a steady production of 2 million ounces annually through 2027 could translate into explosive profit margins.
Meanwhile, Kinross Gold faces headwinds, particularly from rising costs. Management anticipates that the all-in sustaining costs (AISC) per ounce will jump from $1388 in 2024 to $1500 in 2025. If gold prices stagnate, profit margins could be compressed.
A decline in production is also imminent. Management expects production to drop to 2 million ounces from 2025 to 2027—down from 2.1 million ounces in 2024 and 2.4 million ounces in 2020—raising concerns about the company’s ability to replenish its reserves. Although exploration efforts are underway, success is not guaranteed.
In summary, Kinross Gold’s stock is at a crossroads. For investors who believe gold prices will remain near $3000, the company’s cash flow and undervalued stock price make it a compelling buy. For risk-tolerant investors, Kinross Gold is an option to buy on the dip. For others, it may be wise to hold and keep a close eye on gold prices. Only if gold prices consistently fall below $2500 per ounce would it be worth considering selling the stock.
