CA - Agnico Eagle Mines: Undervalued Miner With Lower Risks As Gold Prices Soar

2024-05-16 23:41:34 ET

Summary

• Gold is one of the top-performing assets in 2024, with a strong surge as the Japanese Yen crumbles.
• Gold miners, such as Agnico Eagle Mines, have performed well, outperforming peers Newmont and Barrick, which are seeing costs rise too quickly.
• Agnico's lower jurisdictional risk significantly benefits its peers, as the gold bull thesis largely implies increased political and economic unrest in developing countries.
• Based on an updated income estimate, I believe AEM's forward "P/E" today is closer to 12X to 13X.
• While I am neutral on most large gold miners, I believe AEM's advantage should continue in the long run.

Gold is one of the top-performing assets in 2024, boasting a ~16% return YTD. Gold miners have also performed decently, with the gold miner ETF ( GDX ) rising similarly. As detailed recently regarding Newmont ( NEM ) and the large miner ETF GDX , I prefer gold ETFs such as ( GLD ) to miners. Although miners will likely rise with gold, their production costs are rising too quickly compared to gold, and many are not seeing equal profit growth....

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