Gold prices are at record highs after crossing $5,000 per ounce. The precious metal's price tends to rise along with market uncertainty, global tensions and a weakening dollar. However, the volatility of gold prices makes it a risky investment.
Instead of investing directly in gold or buying shares of an exchange-traded fund (ETF) that tracks the spot price of gold, mining stocks Newmont Corporation (NEM +1.29%) and Agnico Eagle Mines (AEM +0.41%) are well-positioned to keep delivering strong returns, even if the price of the precious metal falls.
Newmont Corporation, the world's largest gold miner by market cap, is raking in record profits while reducing its long-term debt. Agnico Eagle Mines, the No. 2 gold mining company by market cap, is seeing a strong bump in profitability and has also considerably trimmed its long-term debt.
Newmont: More than just gold
While Denver-based Newmont is the leading producer of gold in the world, it also mines copper, lead, zinc and silver, giving it a mix of metals that provide some stability, regardless of whether gold keeps going up or not. It's the only gold producer listed on the S&P 500.
NYSE: NEM
Key Data Points
The key to success for any mining company is two-fold: Its production amount and whether its revenue can outstrip its all-in sustaining cost (AISC), the money it takes to produce the metals. In the third quarter, Newmont reported gold production of 1.4 million ounces, down 28.5%, year over year and 4% from the prior quarter. However, its average AISC for gold co-product was $1,566 per ounce while its average realized gold price (what it sold the gold for) was $3,539 per ounce, so the company made a profit of nearly $2,000 per ounce mined. The company also produced 35 thousand tonnes of copper.
Overall, it had revenue of $5.5 billion, up nearly 20%, year over year, while earnings per share (EPS) was $1.67, up 108% over the same period a year ago. The company put those profits to good use, retiring roughly $2 billion in debt. While it still has $5.4 billion in debt, it has $5.6 billion in cash, so it is in a good position to expand.
One cloud on the horizon for Newmont is that Ghana, where it has two mines, is planning to jettison long-term mining investment stability agreements and double royalties to as much as 12%, if the price of gold exceeds $4,500 per ounce, which it already has. The legislative process for this change is expected to take place early this year, so the impact could be felt in the first quarter of 2026.
While that move would cut into Newmont's profits, it has 12 mines spread across Africa, Australia, North America, Latin America, the Caribbean, Australia, and Papua New Guinea. The company's stock has risen more than 205% over the past year, but despite that run, it is trading for roughly 19 times earnings, only slightly higher than the sector's average of 17 times earnings and that average includes many unprofitable mining companies.
Agnico Eagle combines stability with little debt
Canada-based Agnico is the second-largest gold producer in the world and has 11 mines, including seven in its home country, two in Mexico, and single mines in Australia and Finland. Its properties are in stable jurisdictions that face less political instability than many of its competitors. It is on track to produce a record 3.5 million ounces of gold this year.
NYSE: AEM
Key Data Points
Agnico reported that third-quarter net income rose 86% year over year to $1.06 billion, while its EPS nearly doubled to $2.10.
Thanks to a 145% rise in its share price over the past year, Agnico stock is trading around 32 times earnings, raising concerns that much of its future gains may already be priced in. Another area of concern is that its return on equity (ROE) is 9.35%, below what you would expect from a leading mining company.
Financially, it is well-positioned for expansion. It has $2.7 billion in cash and only $196 million in debt after paying down $950 million in debt this year, through the third quarter. Like Newmont, it runs a high-margin operation. All-in AISC costs for gold production were only $1,373 per ounce, while it realized an average price of $3,476 per ounce on the gold it sold.
Glittering prospects for both stocks
Gold stocks are still lagging the breakneck growth rate of gold itself. But mining companies stand to benefit for years from these elevated gold prices.
Buying these two stocks can serve as a hedge against inflation and add diversification to your portfolio, as well as a modest dividend (both currently yielding below 1%).
These are two of the biggest global mining companies with the advantages of scale in their operations. Unlike junior mining operations, their mines are up and running and their costs are relatively fixed, so if the price of gold does continue to stay high, so will their profits.
