Quick Read
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VanEck Gold Miners ETF ( GDX ), AngloGold Ashanti ( AU ), and Gold Fields ( GFI ) have declined 30%, 33%, and 35% respectively as gold enters a bear market, though miners could multiply gains once gold turns a corner given their low valuations (AU at 16.5x trailing P/E, GFI at 10.2x trailing P/E) and operating leverage.
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Gold’s unexpected plunge amid geopolitical tensions and rising interest rate concerns has pressured mining stocks, but central bank buying and the debasement trade thesis remain bullish drivers if gold finds a bottom.
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The gold mining stock has been in a world of pain amid gold's unexpected plunge into a bear market amid rising geopolitical fears. The VanEck Gold Miners ETF( NYSEARCA:GDX ) is down just shy of 30% from its peak. And every step lower could mean two or three steps down for the gold miners.
It's the big drop that I'm sure many investors were waiting for, but with no bottom in sight, does it still make sense to catch the falling knives in the gold-mining scene? Or could buying a physical gold ETF be the move?
Just because interest rates might not be headed much lower (in fact, they could head higher if the Iran war causes significant inflation), does not mean the bullish drivers behind gold have faded away. And while gold's performance amid the crisis in the Middle East is a mark against gold as an effective hedge in times of war, the big reason to go for gold, even in a moment of weakness, continues to be the debasement trade. Time will tell if central banks are buying amid the correction, but I do think the miners could shine that much brighter once gold manages to find its footing again.
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In this piece, we'll look at two gold miners that are under pressure, but could act as a way to get added torque once gold finds a way to the bottom and bounces. As always, though, the miners are going to be a wilder ride, and those who perceive deeper value in the names might have a tougher time catching the faster-falling knives that are the miners.
Anglogold Ashanti
Anglogold Ashanti( NYSE:AU ) tanked pretty hard amid the sell-off in gold miners, now down a third of its value since the start of March. Undoubtedly, a 33% drop in less than a month is pretty steep, yet the stock is still up fractionally on the year, at least at the time of this writing. Either way, AngoGold Ashanti is one of the harder-hit plays and could be one of the bigger gainers once the tides turn again.
At this juncture, it might be worth waiting for a dip below $70 per share before backing up the truck. In any case, from a long-term perspective, the company is poised to swim in free cash flow. Even with gold in a bear market (now around $4,300 per ounce), AngloGold is poised to make big money for 2026. Of course, that'll be marginally less cash at $4,000. And if gold falls below that level, things could get even scarier for the miners.
With a big tier-one Arthur project in Nevada that looks incredibly promising, perhaps the market is wrong to discount AngloGold to its rivals. Today, the stock goes 16.5 times trailing price-to-earnings (P/E), quite a bit lower than its peer group. Either way, the faster drawdown could precede an elevator up if gold is really poised to shine again.
Gold Fields
Gold Fields( NYSE:GFI ) has taken an even harder hit to the chin, now down nearly 35% from its high. The $36 billion miner has been actively taking steps to derisk its asset portfolio. With assets across the globe, Gold Fields may be more diversified than investors may give it credit for. In any case, the main attraction to the stock has to be the 10.2 times trailing P/E multiple. On a forward-looking basis, shares look even cheaper, going for 8.6 times forward P/E.
Combined with the generous "special dividend" and shareholder-friendly return program, I think Gold Fields stands out as one of the cheapest cash cows of the miners that money can buy. For those seeking deep value and added torque, perhaps Gold Fields is the brightest bargain on the mining basket while gold's in a turbulent spot.
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