In my nearly three decades of covering gold, I’ve seldom seen a greater and more sustained level of strength in the yellow metal than I’ve seen in the last year.
With a rise of 24% in 2024 alone, gold’s strength in the midst of this bull market has been nothing short of astounding.
And the bull run is likely not over yet.
Given that performance, and the catalysts that remain in play, it appears that gold may be on the cusp of what can best be described as a secular uptrend.
But despite that showing, the mainstream press has hardly acknowledged gold’s strength.
Looking at the headlines, you wouldn’t know that it’s matched the returns of the S&P 500 in what’s widely acknowledged as a powerful bull market for stocks.
It’s hard to get a read on why so many news outlets are ignoring gold’s strength, although it could be attributed to the media’s obsessive concern with equity market gains due to the latter’s outsized influence on the economy.
The chief catalysts for the precious metal’s bull market involve a mix of geopolitical concerns, with an expansion of the wars in the Middle East and Eastern Europe looking increasingly likely, while worries persist over the U.S. economic outlook.
What’s more, a number of geopolitical analysts believe the U.S. could even be at war with its chief economic ally, China, within the next couple of years. Last year, a four-star Air Force general predicted that the nation will be at war with China by 2025 and told his staff to “get ready” for it, according to CNBC.
Then there’s the ever-present threat of rising inflation. Recent Consumer Sentiment Index readings have increased concerns among American consumers that living costs will continue rising into 2025.
Moreover, according to Wells Fargo economists Sam Bullard and Jeremiah Kohl, “Higher prices have remained a top concern, as 44% of consumers reported this as the primary driver of their opinion on household finances.”
With so many fears and potential conflicts swirling around the coming New Year—whether real or imagined—it’s no wonder the yellow metal has posted one of its best years in decades in 2024. Historically, gold outperforms in such a climate due to its established reputation as the ultimate safe-haven asset, and for this reason, I expect the yellow metal to remain strong well into next year.
2 Ways to Play the Gold Rush
Skeena Resources (SKE)
In terms of investment opportunities, while most gold mining stocks nowadays fall under the category of momentum plays, there are still a few turnaround opportunities within the sector. Among the late-cycle turnaround names is Skeena Resources (SKE), which is a Canadian mining exploration and development company focused on revitalizing the past-producing Eskay Creek gold-silver mine located in British Columbia’s Golden Triangle region. The company also explores for silver, copper and other precious metals.
Production is expected to begin construction in 2026, with production anticipated by the first half of 2027. Skeena expects to produce around 450,000 gold equivalent ounces (GEOs) per year for the first five years upon completion, with related production of antimony, copper and zinc.
Eskay Creek is further projected to be one of Canada’s largest open-pit gold mines, with analysts predicting it to be number three in Canada within the mine’s first five years of operation. Ore grades, moreover, are expected to nearly triple the global average of active open-pit mines.
Barrick Gold (GOLD)
Then there’s industry stalwart, Barrick Gold (GOLD), which can be categorized as a mid-stage turnaround. The company has been focused on replenishing and replacing its gold reserves rather than buying them at a premium like many of its fellow producers. This places the company on a sound footing to benefit from additional gold price strength in the coming months.
Shares have declined on the heels of a recent earnings disappointment, but on the financial front, analysts believe Barrick could generate upwards of $2.5 billion in FCF next year. And as Barrick’s cash position improves, expectations are strong for higher dividends going forward.
