NEM, FNV, and WPM Primed for Gold Rush 2.0 as Geopolitics Fuel Hard Asset Boom

Business Insider

7 days ago

Amid rising geopolitical tensions, persistent inflation concerns, and growing skepticism about long-term fiscal discipline, investors increasingly seek stability in hard assets. The U.S. national debt has surpassed $36 trillion, with annual interest payments approaching $1 trillion. At the same time, central banks worldwide are significantly increasing their gold reserves, reflecting growing concerns about fiscal sustainability and potential currency devaluation.
Confident Investing Starts Here:
Easily unpack a company's performance with TipRanks' new KPI Data for smart investment decisions
Receive undervalued, market resilient stocks right to your inbox with TipRanks' Smart Value Newsletter
In this uncertain macroeconomic environment, marked by rising deficits and increasing questions about the long-term strength of the U.S. dollar, gold has become an increasingly attractive asset.
Against this backdrop, investors are turning to hard assets for stability, and three companies stand out as strong opportunities: Newmont Corporation (NEM), Franco-Nevada (FNV), and Wheaton Precious Metals (WPM). Each offers unique strengths and is well-positioned to benefit from rising gold prices and the broader shift toward safe-haven investments.
Newmont Corporation (NYSE:NEM) | The Gold Mining Titan
Newmont is one of the most prominent players in the gold mining space. In fact, it is the world's largest by production, with a sprawling portfolio across four continents. Their latest report showed a 55% jump in adjusted EBITDA to $2.6 billion in Q1, driven by a 41% spike in realized gold prices, even if volumes fell 10%.
That's the kind of leverage you want when gold's hovering around $2,700 an ounce, powered by central banks hoarding bullion and investors ditching shaky bonds. But besides Newmont coasting on high prices, they're also streamlining after their $16.8 billion Newcrest acquisition in 2023, integrating top-tier assets like Lihir in Papua New Guinea and Brucejack in Canada, which makes for another tailwind.
However, scale brings complexity. Managing mines from Nevada to Ghana isn't a picnic, and unit cash costs crept up 5% last quarter. Still, CEO Tom Palmer remains laser-focused on 'sustainable and responsible mining,' which is winning ESG points.
While that may sound insignificant to most, it actually matters to institutional investors. In the meantime, with U.S. debt-to-GDP pushing 120% and whispers of more quantitative easing, Newmont's diversified production (gold, copper, silver) makes it a rock-solid bet to capitalize on hard-asset demand.
Is Newmont Corporation a Buy, Sell, or Hold?
Currently, most analysts are bullish on NEM stock. The stock features a Moderate Buy consensus rating based on nine Buy and four Hold ratings assigned in the past three months. No analyst rates the stock a sell. NEM's average stock price target of $61.55 implies ~15% upside over the next twelve months, despite shares having already rallied 45% year-to-date.
Franco-Nevada (NYSE:FNV) | The Royalty King
If Newmont is the muscle in the gold mining game, Franco-Nevada is the brains, playing the royalty and streaming angle with a portfolio so diversified it's practically a hedge fund for precious metals. Their Q1 numbers, posted earlier this month, showed revenue holding steady despite a dip in gold equivalent ounces, thanks to higher gold and silver prices.
Now, note that Franco-Nevada is not the one that digs the dirt; they just bankroll miners and get a cut of the output, which shields them from cost inflation that plagues operators like Newmont. This essentially means that with mining revenues set to surge, don't the back of higher hold prices, margins will also climb, resulting in disproportionately higher profits.
Arguably, Franco-Nevada operates a low-risk model. With no operational headaches, its free cash flow is set to surge in the coming quarters, enabling a substantial dividend hike and/or significant capital deployment toward buybacks. And again, the macro picture, with U.S. deficits projected to hit $2 trillion annually by 2030, screams currency debasement, which should keep pushing gold as a safe haven and thus increase Franco-Nevada's ability to scoop up new streams in a frothy market. The long-term outlook certainly seems favorable.
Is Franco-Nevada a Buy, Sell, or Hold?
On Wall Street, FNV stock carries a Moderate Buy consensus rating based on seven Buy, five Hold, and zero Sell ratings over the past three months. FNV's average stock price target of $182.33 implies approximately 8.5% upside potential over the next twelve months.
Wheaton Precious Metals (NYSE:WPM) | The Streaming Sweet Spot
Wheaton Precious Metals is Franco-Nevada's scrappy cousin, another streaming heavyweight who loves turning gold and silver into cash flow without touching a shovel. Their latest numbers boasted a 12% revenue uptick year-over-year, driven by 29 million ounces of silver and over 350,000 ounces of gold sold. They also shook off a $1 billion tax dispute with Canada, settled back in 2018, which had loomed over the sector. That resolution set a precedent, easing worries for peers like Franco-Nevada, too.
Moreover, I like Wheaton's recent deal-making agility and activity overall. They've inked new streams on projects like Salobo in Brazil, locking in low-cost metal purchases while gold and silver prices climb. With global debt levels sparking fears of currency erosion, especially as the U.S. is to service a nearly $1 trillion annual interest bill, Wheaton's diversified portfolio and lean cost structure make it a nimble play. Its 0.73% dividend yield isn't flashy, but it's steady, and their balance sheet, with just $1.26 billion in debt, is rock-solid.
Is Wheaton Precious Metals a Good Buy?
Wheaton Precious Metals is currently covered by 15 Wall Street analysts, who appear quite bullish on the name. WPM stock carries a Strong Buy consensus rating, based on 14 Buys and just one Hold rating over the past three months. WPM's average stock price target of $88.28 implies ~2% upside potential over the next twelve months.
The Golden Horizon
The global financial system is showing signs of strain, with the U.S. government continuing to borrow at an unprecedented pace. Meanwhile, central banks around the world are purchasing record amounts of gold, signaling a growing shift toward tangible stores of value. In this environment, gold is evolving from a traditional hedge to an essential component of a resilient portfolio.
Beyond owning physical gold, investors have compelling options through equities. Newmont offers the scale and leverage of a major miner, Franco-Nevada brings a low-risk royalty model, and Wheaton Precious Metals excels with its efficient streaming approach. Whether you're seeking the direct exposure of a producer or the capital-light advantage of a royalty/streaming company, these three stand out as strategic plays in a world increasingly questioning the stability of fiat currencies.