Despite the fears of the recession and a resilient labor market, the gold prizes have been given a grip because of President Trump’s rates on imported goods, giving the gold mining stocks a boost Barrick Gold Corporation ((GOLD – Free report) and Kinross Gold Corporation ((KGC – Free report).
Do you have to consider investing in these gold mining stocks? Let’s take a look –
Impact of Trump rates 2.0 on shares
Trump recently imposed an extra rate of 25% on the import of basic metals such as aluminum and steel. Trump also announced plans to impose mutual rates and to reform trade relationships with different partners. In addition to an extra rate of 10% on Chinese import, the Trump administration planned a rate of 25% on products from Canada and Mexico.
Rates have always damaged shares. In 2018 and 2019, the S&P 500 consistently fell 5% on days that the Trump administration announced rates, per The Goldman Sachs Group, Inc. ((GS – Free report). For every 5% increase in American rates, the profit per share of the S&P 500 will fall by 1-2%, according to the most important stock strategist David Kostin from Goldman Sachs. Rates reinforce the dollar, which adversely affect S&P 500 companies, because they earn some income abroad.
The rates are expected to increase the price pressure, leading to higher interest rates and an increase in bond returns. Higher bond returns in turn make shares look less attractive.
Golden Glitters, that also applies to mining stocks
In contrast to shares, rates predict well for gold prices. This is because in particular the threat of mutual rates can escalate a trade war and disrupt global economic growth, which increases the demand for safe port activa such as gold.
Gold prices therefore rose on Monday to a record high above $ 2,900 per ounce, powered by Trump’s rates. The Golden Prizes rose by 44% last year and trounded the return of the S&P 500 of 22%, according to BlackRock Investment Institute. After all, central banks have acquired more than 1,000 tons of gold worldwide in 2024. It is the third consecutive year of no less than 1,000 tons of gold purchases by central banks worldwide, according to the World Gold Council.
Prominent banks such as Goldman Sachs and Citigroup Inc. ((C – Free report) increased the target price for gold to $ 3,000 per ounce by the end of the year. With the price of the yellow metal scales upwards, it is expected that the profit margins of gold mining share such as Barrick Gold and Kinross Gold will improve, making them attractive investments.
Barrick Gold – Wining large exploration programs
Barrick Gold is an important global gold mining company with activities in the United States. Barrick’s tactical investments, including Nevada’s joint venture with Newmont, strengthen its position as a leading gold mining company with a strong growth potential.
Barrick’s expected profit growth for the current year is 46.4%. The $ 1.23 Zacks Consensus estimate for Gold’s profit per share (EPS) has risen 32.3% compared to a year ago.
Image source: Zacks Investment Research
Makelaars assume that the gold supply will jump, which increases the average price target in the short term to $ 21.42 of the last final price of $ 17.04 and the highest target at $ 27.86, an advantage of 63.5% .
Image source: Zacks Investment Research
Kinross Gold – Wining from Organic Development Projects
Kinross Gold is investigating gold mines and has large assets in the United States and Canada. Kinross Gold promotes projects for a strong growth profile of top gold producers.
Kinross’s expected profit growth applied for the current year is 65.9%. The estimate of 73 cents Zacks for the EPS of KGC is an increase of 102.8% compared to a year ago.
Image source: Zacks Investment Research
Brokers assume that the KGC shares will jump, which increases the average price target in the short term to $ 12.54 of the last final price of $ 11.87 and set the highest goal at $ 14.45, an advantage of 21 , 7%.
Image source: Zacks Investment Research
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