In times of market turmoil, investors regularly turn to gold as a safe haven asset. However, they can also make a type of indirect investment in gold by buying shares of mining and related companies which focus on gold production. Depending upon their business models and structures, these companies may not be as directly influenced by the price of gold as a direct investment in the precious metal itself. On the other hand, these companies often also have exposure to many other markets, diluting their connection to the price of gold further. Some of the top gold mining operations include companies like Barrick Gold (ABX) and Newmont Mining Corp. (NEM).
On February 25, 2019, Newmont Mining (NEM) announced a plan to merge with Barrick Gold. If approved, it would create the largest company with Tier One gold assets in the world. As gold prices have been relatively stagnant, gold companies are seeking mergers and other strategic moves to control market share.
After reaching a low point in August of 2018, gold rallied off and on throughout the final four months of the year. Although it wasn't able to end the year with overall gains for 2018, gold nonetheless bounced back in the final weeks before 2019. This may have been in part thanks to the devastating losses surrounding the broader market, as investors looked to escape highly volatile stocks in favor of something they hoped to be more stable. On the other hand, many gold mining companies saw relatively significant gains over the course of the month of December. Barrick Gold and Randgold Resources, two of the largest mining operations in the world, finalized a planned merger to create a new behemoth in the gold mining industry. Rumors of Fed rate hikes also helped to propel these stocks upward, even as many other industries were in decline.
In considering the top gold stocks of January, 2019, we've drawn from among the largest gold mining and related companies in the world. Each of these companies has a market cap of more than $4 billion, and many are significantly larger than that. The list here is presented in order of monthly performance based on the opening stock price, as of December 3, 2018, and closing price as of December 31, 2018. We'll compare a company's performance against the average performance of 7.76% of the S&P Commodity Producers Gold Index for the same time period.
1. AngloGold Ashanti Ltd. (AU)
- Market Cap: $5.43 billion
- Performance: 23.16%
2. Kirkland Lake Gold Ltd. (KL)
- Market Cap: $6.34 billion
- Performance: 20.03%
3. Kinross Gold Corp. (KGC)
- Market Cap: $4.05 billion
- Performance: 14.49%
4. Royal Gold, Inc. (RGLD)
- Market Cap: $5.43 billion
- Performance: 13.94%
5. Agnico Eagle Mines Ltd. (AEM)
- Market Cap: $9.35 billion
- Performance: 12.69%
6. Barrick Gold Corp. (GOLD)
- Market Cap: $20.91 billion
- Performance: 4.77%
7. Newmont Mining Corp. (NEM)
- Market Cap: $17.54 billion
- Performance: 4.74%
The third-largest gold mining company in the world in terms of production, AngloGold Ashanti is a South African company with operations in nearly a dozen countries. In 2004, the company as it currently stands was formed when AngloGold Limited and Ashanti Goldfields Company Limited merged. In 2017, the company produced about 3.8 million ounces of gold.
Heading into the final few months of 2018, AngloGold Ashanti touted impressive figures. The company's all-in sustaining costs (AISC) improved 14% year-over-year for Q3 2018, with full-year production figures estimated to be at the top end of guidance. Further, AngloGold Ashanti strengthened its position relative to other companies in its industry by continuing to stand out for its safety practices.
AU stock has plateaued somewhat during the month of January, but it could be poised for bigger gains following the release of overall 2018 figures in mid-February.
Kirkland Lake Gold
Kirkland Lake Gold focuses on gold production from mines in Australia and Canada. The company, headquartered in Ontario, set as a target production level for 2018 670,000 ounces of gold. The company's stated goals include delivering low-cost production, continuing to advance its exploration and development pipelines, and supplementing its resource reserve base so as to make possible future growth.
In early January, Kirkland Lake Gold announced that it had surpassed its production goals for 2018, producing nearly 724,000 ounces of gold across the year. Production in Q4 was close to 231,000 ounces, exceeding the previous top-producing quarter by 28%. The company is continuing its exploration process at its Fosterville mine and success in that area could fuel continued growth into the future.
Kinross Gold Corp.
Another Ontario-based mining operation, Kinross Gold Corp. is the smallest company on our list by market cap. The company oversees mining operations in six different countries, although Canada is not one of them. An estimated 60% of the company's gold production for 2018 came from mining operations located in North and South America.
Although Kinross's Q3 production figures were down slightly year-over-year, the company is expanding rapidly. Multiple new mining operations are expected to begin to produce ore at some point in 2019 or 2020.
Denver-based Royal Gold, Inc. is distinct from other companies on this list in that it is not a mining outfit. Rather, Royal Gold is involved in the acquisition and management of precious metals streaming and royalty interests. The company has claims on multiple precious metals operations in nearly two dozen companies.
Late in 2018, Royal Gold raised its annual calendar year dividend, marking the 18th consecutive year that the company made such an adjustment. The company sold about 56,000 gold equivalence ounces for the quarter ending December 31, 2018. Future performance is likely dependent upon the release of the latest quarterly figures in early February.
Agnico Eagle Mines
Agnico Eagle Mines operates mining projects in Canada, Finland and Mexico. The Canada-based company is also in the exploration phase of potential projects in the U.S. and Sweden. Because the company has a long-standing practice of no forward gold sales, AEM shareholders have full exposure to gold prices.
Heading into the final two months of 2018, Agnico Eagle Mines announced plans to increase its production guidance. At the same time, the company saw reduced net income relative to the analogous period in 2017 as a result of lower gold sales volumes and other factors. If AEM is able to produce its anticipated 1.60 million ounces in the next year, the company could see further stock boosts.
With operations in more than a dozen countries and a market cap of more than $20 billion, Barrick Gold is the largest company on our list and the largest gold company in the world. Barrick trades on the NYSE under the GOLD ticker and on the Toronto Stock Exchange under the ABX ticker.
Arguably the biggest news in the gold mining industry was the merger of Barrick Gold and Randgold Resources, a South African mining company, late in 2018. The newly merged company is still known as Barrick Gold. The new mega-mining operation owns half of the Top 10 Tier One gold assets in the world and it also sports the lowest cash cost of any major gold mining operation. Although there are unknowns about the newly merged company, it is an exciting time to invest in Barrick.
One of the oldest mining operations, Newmont Mining has a history dating back almost 100 years. The Colorado-based company has operations in five countries around the world and is currently the only gold mining company to be listed in the S&P 500.
While Barrick and Randgold have already merged, Newmont Mining announced in mid-January of 2019 that it would merge with Goldcorp Inc. in a stock-for-stock transaction worth $10 billion. The new company, Newmont Goldcorp, will be one of the very largest gold mining businesses in the world. Like Barrick, there are uncertainties going forward, but Newmont is certainly a stock to watch.
With markets generally having turned around from their disappointing performance in December, investors may not flock to gold in 2019 in the same way that they did heading into the new year. Nonetheless, it remains an opportune time for many of the world's largest gold mining companies, as new exploration and development continues its expansion and production levels grow.