There was no ambiguity this week from Federal Reserve Chair Jay Powell, as he and the rest of Washington had to finally face the music over spiraling inflation caused in part by the rampant government spending spree that has taken inflation to the highest levels in over 40 years. The 8.6% increase in the May consumer price index inflation rate, combined with the 6% increase in the core number that excludes food or energy, was enough to bring out the interest rate bazooka. It delivered a 75-basis-point increase for the first time since November of 1994, and it may be poised to offer the same in July.
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The question for investors is what to do now? One of the best ideas always has been to seek positions in commodities. The best area for investors to look at may be the top gold miners and royalty companies. The bonus for investors is that the sector surprisingly has taken a big hit over the past few months and is offering the best entry points this year.

We screened the BofA Securities gold mining research universe looking for the top stocks and found seven that are rated Buy, pay very respectable dividends and look like great ideas now for worried investors. It is important to remember that no single analyst report should be used as a sole basis for any buying or selling decision.

Agnico Eagle Mines

This is one of Wall Street’s most preferred North American gold producers. Agnico Eagle Mines Ltd. (NYSE: AEM) is a senior Canadian gold-mining company that has produced precious metals since 1957. Its eight mines are located in Canada, Finland and Mexico, with exploration and development activities in each of these regions, as well as in the United States and Sweden.

The company and its shareholders have full exposure to gold prices due to its long-standing policy of no forward gold sales. The stock has been crushed as gold has sold off last year’s highs. And with a surge of inflation, you can bet many savvy portfolio managers are ready to add back top companies like this. Agnico Eagle has declared a cash dividend every year since 1983.

Shareholders now receive a 3.11% dividend. The BofA Securities price target on Agnico Eagle Mines stock is $73. The consensus target is higher at $93.41, and shares closed almost 5% higher on Thursday at $51.46.

Barrick Gold

This is another top gold stock, and it still offers a solid entry point. Barrick Gold Corp. (NYSE: GOLD) and Randgold Resources completed their merger on January 1, 2019. This created the world’s largest gold company in terms of production, reserves and market capitalization.

The company holds a 50% interest in the Veladero mine located in the San Juan Province of Argentina; 50% interest in the KCGM, a gold mine located in Australia; 95% interest in Porgera, a gold mine located in Papua New Guinea; 50% interest in the Zalda­var, a copper mine located in Chile; and 50% interest in the Jabal Sayid, a copper mine located in Saudi Arabia.
Barrick also owns gold mines and exploration properties in Africa and gold projects located in South America and North America. It also has a strategic cooperation agreement with Shandong Gold Group.

Barrick Gold stock investors receive a 2% dividend yield. BofA Securities has a $31.75 price target, while the consensus target is $28.41. Thursday’s closing share price was $20.03.
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B2Gold

This is a small-cap gold stock for aggressive investors looking for sector exposure. B2Gold Corp. (NYSE: BTG) is a global, growth-oriented mid-tier gold producer whose primary assets include gold mines located in Nicaragua (La Libertad and El Limon), the Philippines (Masbate) and Namibia (Otjikoto) and Mali (Fekola).

The company reported that gold production in first quarter of 2022 was 209,365 ounces, including 12,892 ounces of attributable production from Calibre Mining, which was 5% above budget. In addition, consolidated gold revenues for the quarter were $366 million, up 1% year over year, due in part to a higher average realized gold price, which was offset by lower gold ounces sold. In the first quarter, the company sold 195,100 ounces of gold for a very solid $1,874 per ounce.

The company also reported that the total consolidated gold production figure was 5% lower than the prior-year quarter due to the previously planned significant waste stripping campaign, in addition to lower mined ore tonnage at the Fekola mine in the first quarter of 2022, as Fekola Pit continues to be developed.

Investors receive a 4.30% dividend. The $5.85 BofA Securities price target is in line with the $5.87 consensus target for B2Gold stock, which closed on Thursday at $3.72.

Gold Fields

This company posted solid earnings and looks to be breaking out of a double-top high. Gold Fields Ltd. (NYSE: GFI) operates as a gold producer with reserves and resources in Chile, South Africa, Ghana, West Africa, Australia and Peru.

The company also explores for copper deposits. It holds interests in nine operating mines with an annual gold-equivalent production of approximately 2.24 million ounces, as well as gold mineral reserves of approximately 52.1 million ounces and mineral resources of approximately 116.0 million ounces. Gold Fields was founded in 1887 and is based in Sandton, South Africa.

Investors receive a 2.73% dividend. BofA Securities has set a $14.88 target price. The consensus target is $14.66, and Thursday’s final Gold Fields stock trade was reported at $9.79.

Kinross Gold

Investors who are more aggressive may want to consider this smaller cap mining company. Kinross Gold Corp. (NYSE: KGC) engages in the acquisition, exploration and development of gold properties principally in Canada, the United States, the Russian Federation, Brazil, Chile, Ghana and Mauritania.

The company is also involved in the extraction and processing of gold-containing ores, reclamation of gold mining properties and the production and sale of silver.
Kinross Gold announced this week it had sold all of its Russian assets to the Highland Gold Mining Group for $340 million in cash, half of the previously announced price. The Toronto-based miner said in April it would sell its Kupol mine and Udinsk project to Highland Gold, one of the largest gold miners in Russia, for $680 million.

“The transaction consideration was adjusted by the parties following review by the recently formed Russian Sub-commission on the Control of Foreign Investments,” Kinross said, adding the sale was approved for a price not exceeding $340 million.
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Kinross Gold stock comes with a 2.90% dividend. The BofA Securities price target is $7.65. That compares with a higher consensus target of $9.75 and Thursday’s closing price of $4.14.

Newmont

This is one of the largest mining companies and a solid buy for investors who are more conservative. Newmont Corp. (NYSE: NEM) is engaged in the production of gold.

Its North America segment consists primarily of Carlin, Phoenix, Twin Creeks and Long Canyon in Nevada and Cripple Creek and Victor in Colorado. The South America segment consists primarily of Yanacocha in Peru and Merian in Suriname. The Australia segment consists primarily of Boddington, Tanami and Kalgoorlie in Australia. The Africa segment consists primarily of Ahafo and Akyem in Ghana.

Shareholders receive a 3.40% dividend. Newmont stock has a $96 price objective at BofA Securities, but the consensus target is up at $118.55. Shares closed trading on Thursday at $64.71.

Wheaton Precious Metals

This precious metals royalty stock makes good sense for more conservative investors who are looking to have exposure to the sector. Wheaton Precious Metals Corp. (NYSE: WPM) is a Canadian precious metals streaming company with approximately 60% of its revenues from the sale of silver and 40% from gold.

Under the terms of long-term contracts, the company purchases silver and gold from a variety of mines, including Goldcorp’s Penasquito mine in Mexico, Vale’s Salobo mine in Brazil, the Lundin Mining Zinkgruvan mine in Sweden, and Glencore’s Antamina and Yauliyacu mines in Peru, and then sells the silver and gold into the open market.

Shareholders receive a 1.36% dividend. The BofA Securities price target of $56 compares with a $59.13 consensus target. Wheaton Precious Metals stock closed most recently at $38.92.

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The SPDR Gold Trust (NYSE: GLD) exchange-traded fund is perhaps one of the best pure plays on gold for investors. The trust that sponsors the fund holds physical gold bullion, as well as some cash. Each share represents one-tenth of an ounce of the price of gold. Note though that the fund does not pay a dividend.

Proper asset allocation should always include at least a single-digit percentage holding of precious metals like gold and silver. Not only do they hedge inflation, which is huge now and could be over the long term, but they can really help if the market does go into correction or bear market mode, as they tend to trade inverse to markets.

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