The past week, gold prices continued to pick up overall, trading roughly at $1,785. A few days later, the price reached nearly $1,815 before falling again to $1,790 on Dec 21.
But by midday December 22 gold was again on the rise, and is currently trading around $1,805. A clear resistant line is forming but gold doesn’t seem to stay below it. If the trend persists, $1,800 may be the new support line for gold prices.
Overall, gold prices rose in year-end trading. And an improved risk appetite has has strengthened its appeal. Several factors are contributing to the demand for bullion and gold stocks. Mainly – inflation, the new COVID variant(s) and the rise of risk-on investments ahead of Christmas, known as a 'Santa Claus rally.' Christmas buying and trading, in particular, have been keeping gold above the $1,800 level.
Two of the best gold stocks to invest in are Kirkland Lake Gold and Agnico Eagle Mines. A proposed merger will see Kirkland become part of Agnico. After the merger, Agnico Eagle, which will own 54% stake in the combined company, says it'll become "the gold industry's highest-quality senior producer, with the lowest unit costs, highest margins, most favorable risk profile and industry-leading best practices in key areas of environmental, social and governance (ESG)."
The strategic move will see Agnico take ownership of all assets of Kirkland, which is one of the lowest-cost producers in the gold industry. The merger will make Agnico Eagle Canada's leading gold producer in terms of annual production capacity. This deal will give Agnico significant advantage over competitors and increase dividends for shareholders.
Franco-Nevada is another mining stock that analysts recommend holding. The company has the potential to make money even when gold prices are low. Because Franco-Nevada buys gold from third-party miners, it can negotiate lower prices than spot prices. Franco-Nevada has similar arrangements with some oil and gas companies as well.
Franco-Nevada has a massive portfolio consisting of 325 mining assets, including 58 operational and 40 in advanced stage of development. The company is on track to deliver a record year. A drop in the price of its mining stock means they are currently undervalued and a good time to invest in. Franco announced it will be increasing its dividend for the 14th consecutive year, giving shareholders a reason to remain optimistic amid a volatile market.