Gold's Rebound and Agnico Eagle: Why the Miners' Pullback Is an Opportunity

By Gavin Magor Reviewed by: Leo Tavolaro

If you own gold, or you've been waiting for a better price on gold stocks, this week handed you something useful.

Gold had its best day since August on Wednesday.

But the reason it rose matters more to your money than the gain itself.

This rally didn't need a crisis.

It came from a weaker dollar, lower bond yields and cheaper oil, and that last one quietly fattens a miner's profits.

Why this rebound is different, what history says, and the miner I'd buy on the dip.

A Calmer Kind of Gold Rally

Gold usually grabs headlines when something frightening happens.

Instead, the dollar fell to its lowest level since late September.

Longer-dated Treasury yields also fell.

Both make gold more attractive, because gold pays no interest and is priced in dollars.

For you, a calm rally is a healthier rally.

It doesn't depend on bad news continuing.

And it lands while gold still sits well below its peak.

Gold set a record of $5,589 an ounce on Jan. 28.

On Thursday morning, it traded near $4,100.

That leaves gold about a quarter below its high, even after this week's jump.

Big buyers haven't walked away.

Central banks bought 321 metric tons of gold in the third quarter, the most since late 2024.

Why Cheaper Oil Is Good News for Gold Stocks

Gold miners burn enormous amounts of diesel to haul rock and run equipment.

When fuel gets cheaper, their cost of producing each ounce falls.

West Texas Intermediate crude settled at $102.78 a barrel on Wednesday, Oct. 28.

One week later, on Wednesday, it settled at $88.12.

That's a drop of nearly $15 a barrel in a single week.

Diesel at the pump is slower to follow.

The national average was about $6.26 a gallon on Thursday.

That's below the record of $6.53, set Sept. 22.

Expect diesel to keep easing if oil holds near current levels.

For miners, that relief arrives just as gold turns higher.

Rising prices on one side and falling costs on the other is a powerful mix for profits.

The Miner's Margin Math

Agnico Eagle Mines (AEM) shows how wide the gap already is.

In the third quarter, it sold gold for an average of $4,264 an ounce.

Its all-in sustaining cost, the full cost to produce and maintain output, was $1,648 an ounce.

That's a profit cushion of more than $2,600 on every ounce.

Agnico says diesel was its main input-cost pressure this year.

Diesel makes up about 11% of Agnico's operating costs, management said on the Oct. 29 call.

Elevated diesel prices added more than $30 an ounce to its cash costs versus budget in the quarter.

So falling fuel prices should flow to the bottom line.

Newmont (NEM) tells a similar story.

It realized about $4,320 an ounce for its gold in the third quarter.

Its all-in sustaining cost was about $1,450 an ounce.

Even if gold slipped back toward $4,000, those margins would remain very wide.

That's the cushion that lets you buy a pullback with confidence.

When Gold Has Been Here Before

Gold peaked at $193 an ounce in December 1974.

By August 1976, it had fallen to about $113.

That was a drop of more than 40% in the middle of a historic bull market.

Gold then rose above $850 by January 1980.

It happened again in 2008.

Gold hit $983 in March 2008.

It fell to $765 by November.

It reached $1,873 by September 2011.

This year's pullback, about 27% from the January record, sits between those episodes.

In both cases, the deep drop was a reset, not the end of the run.

After a Midterm Election

Kitco studied the 13 midterm elections from 1974 to 2022.

In eight of them, gold's average November price was higher a year later.

The average change was a gain of 14%.

When control of at least one chamber of Congress changed hands, the average gain was 15%.

Gold rose 20% after the 2018 midterm.

It rose 15% after the 2022 midterm.

Thirteen elections is a small sample, and elections don't move gold on their own.

What matters is the mix that follows: a softer dollar, lower yields and gridlock that slows new spending.

That's the mix in place right now.

Other Ways to Own the Rebound

Newmont earns a Weiss rating of B, a BUY.

It generated $1.9 billion of free cash flow in the third quarter.

For you, that's a miner with the size to keep paying dividends and buying back stock.

Franco-Nevada: Gold Without the Fuel Bill

Franco-Nevada (FNV) earns a Weiss rating of B, a BUY.

It provides upfront money to mine operators in exchange for royalties and streams, so it doesn't run the trucks itself.

The company says that model limits its exposure to cost inflation.

That makes it a steadier way to ride gold if you'd rather skip the operating risk.

SPDR Gold Shares: The Plain Bullion Route

If you simply want the metal, SPDR Gold Shares (GLD) earns a Weiss rating of B-, a BUY.

The Miners ETF: Where Our Rating Says Pass

The VanEck Gold Miners ETF (GDX) carries a Weiss rating of D+, a SELL.

It closed Wednesday at $84.59.

That's about 27% below its February peak.

A cheap basket isn't the same as a good one.

It holds the high-cost producers along with the low-cost ones.

Our ratings favor picking the strongest miners individually.

Let the Ratings Do the Sorting

Every fund rating in this report came straight from the live Weiss Ratings pages.

Weiss Ratings Plus puts that same work in front of you, with real-time ratings, instant alerts on upgrades and downgrades, and exclusive analysis.

It's how you'll know the day a long Treasury fund earns a better grade.

And it's how you'll see our next move on U.S. debt as soon as we make it.

Click here to see what Weiss Ratings Plus can do for you.

Back to the Bargain Bin: Agnico Eagle

So what about waiting for a better price on gold stocks?

For Agnico Eagle, that price may already be here.

It earns a Weiss rating of B, a BUY.

The stock closed Wednesday at $183.45.

That's about 28% below its March peak.

In the third quarter, Agnico bought back its own shares at an average of $192.60.

You can now buy the stock for less than the company itself paid.

It also holds net cash of $3.4 billion, so it isn't borrowing to fund those buybacks.

The miners fell hard alongside bullion after their early-year highs.

Yet their profit margins stayed wide, and their fuel costs are now heading down.

I'd buy Agnico Eagle at market.

What I'm Watching

• The Federal Reserve holding rates steady at its Dec. 8-9 meeting, which would extend the dollar's slide.
• The national average for diesel falling below $6 a gallon before year-end.
• Agnico's all-in sustaining cost per ounce falling back below its third-quarter level when it reports fourth-quarter results.
• Gold climbing back toward $4,500, Citi's target for early February.

Bottom Line

If you've been waiting for a better price on gold stocks, the miners' pullback is your opening.

Gold is rising for calm reasons, and the miners' fuel bills are falling.

Agnico Eagle, rated B, is my top pick, and a BUY at market.

Newmont and Franco-Nevada are BUYs as well.

Let the crowd chase bullion headlines. You can buy the profit cushion underneath them.

Cheers!

Gavin