Shares of gold miners set a new record. Who are the main beneficiaries of the rally?

The NYSE Arca Gold Miners Index has hit an all-time high. Uncertainty amid trade wars, conflicts and discussions around the Fed pushed investors into "safe haven assets". Who turned out to be the main beneficiary of the rally and will it continue?

NYSE Arca Gold Miners Index updated the historical maximum during trading on Friday, Bloomberg reports. The benchmark last set a record in 2011 amid the European debt crisis and the first downgrade of the U.S. credit rating, the agency adds. However, now uncertainty has again spurred investor interest in "safe havens": since the beginning of the year, shares of the largest players in the sector - Newmont, Agnico Eagle, Wheaton Precious Metals and Barrick - have risen by at least 80% each. Market participants are concerned about global instability due to trade wars and world conflicts, Bloomberg explains. Additionally, the growth of prices for gold and gold miners' securities is caused by Donald Trump's attempts to remove Fed board member Lisa Cook and uncertainty around the regulator's plans to cut rates, the agency adds.

- American mining company Newmont. Its profit in 2024 increased by more than 100% after two years of decline, and in 2025 should add more than 50%, Bloomberg notes with reference to analysts' calculations. The company's shares have doubled in price since the beginning of the year and are trading at a three-year high. Veritas Investment Research analyst Martin Prader called Newmont his top recommendation among "gold" securities due to such a sharp transition from decline to growth and cost reduction.

- Canadian Agnico Eagle. Prader named this company another favorite due to its strong results and significant assets in Canada. Agnico's quotes also showed strong growth: its securities in the U.S. rose by more than 90% and reached an all-time high. The company expects a significant increase in profits with a decrease in gold production.

- Another company mentioned by Bloomberg is Barrick. Despite $1 bln of write-downs in the second quarter, the company's securities in the U.S. have risen 80% since the beginning of the year.

Gold miners have become a growth driver for the broader market as well. For example, the Canadian stock index S&P/TSX Composite has outperformed most U.S. indices this year: it has added almost 18% since the beginning of the year, while the S&P 500 has gained about 10%. Eight of the top ten securities in the Canadian index are shares of gold mining companies.

While analysts aren't predicting gold prices to fall anytime soon, they warn: the uncertainty that has fueled the market could just as quickly change its momentum. "When you see 75% yields and three consecutive years of solid growth, it's hard to say stocks can go any higher," said Andrew Musgraves of VanEck. He said gold's outlook can change literally on a daily basis - depending on how authorities react to trade policy changes.

However, gold miners' stocks still remain cheaper than the broad market, with their price/earnings ratio of less than 21 versus 27 for the S&P 500, Bloomberg emphasized.

This article was AI-translated and verified by a human editor