Bank of America Sees Gold as the Last Safe Haven: Top 3 Picks

October 22, 2024 at 07:00 AM EDT

Shiny golden nuggets on black coals, top view.

Historically, investors have called the dollar index, United States treasury bonds, and even gold the main safe havens in the global economy when and if trouble arises. However, this common knowledge has attracted many buyers positioning themselves in these areas ahead of what could turn out to be a volatile stock market.

With this in mind, bond prices have been lackluster, considering the iShares 20+ Year Treasury Bond ETF (NASDAQ: TLT), leaving little to no options as “safe havens” to protect and preserve capital today. That is why analysts at Bank of America have deemed gold the only safe haven left in the market, which makes sense considering the commodity is de-centralized compared to bonds and the dollar index.

De-centralization means it cannot be as easily manipulated or maintained by central banks and is free to transact by other nations. To profit from this trend and bullish momentum in gold lately, investors can consider stocks like Barrick Gold Corp. (NYSE: GOLD) and Hecla Mining (NYSE: HL) as basic materials plays, and then the SPDR Gold Shares (NYSEARCA: GLD) for an ETF-like exposure into the precious metal.

Bullish Momentum Isn’t Over for Barrick Gold Stock

Even though the stock trades at a new 52-week high and has already delivered an impressive rally of up to 26% over the past 12 months, some on Wall Street still think the company could give markets an additional double-digit rally in the coming quarters. This is especially true if more gold buyers come in after Bank of America’s statement.

The consensus price target for Barrick Gold stock is $23.6 a share today, which calls for a decent rally of 13% from its current price. However, outlier analyst ratings are more important today than ever. Raymond James reiterated its Outperform rating as of September 2024, with a higher valuation as well.

They see the stock going to $26 a share this time, calling for an additional rally of 24.4% for Barrick Gold stock for 24.4% upside, not to mention a new high for the company this year. Investors should consider other technical gauges today to determine whether there is more upside left in the coming quarters.

This gauge is taken from the company’s short interest, which has fallen by 29.8% in the past month alone. This shows bearish capitulation ahead of new potential gains in the stock after the bank’s recommendation. Some institutional buyers were reiterating their bullish outlooks for Barrick Gold stock today, replacing these bears.

Those at Allspring Global Investments decided to boost their holdings by 4.8% as of October 2024, bringing their net investment up to $17.4 million today to give investors another bullish gauge to consider moving forward.

Hecla Mining Stock Poised to Catch Up to Rising Gold Prices

Gold and silver are fundamentally correlated for obvious reasons. A statistical correlation measure of up to 88% gives investors an opening to invest in silver, especially now that gold prices have significantly outperformed their peers over the past 12 months. Playing catch-up is going to be a bullish call for Hecla Mining stock.

Considering that silver has caught up to gold in the past couple of quarters, it seems that Hecla Mining has enough momentum to deliver another double-digit rally despite its 72% performance over the year. This belief is amplified by recent analyst ratings by HC Wainwright, shooting for a valuation of $10.25 a share alongside a Buy rating.

This new valuation calls for an additional 40.4% rally from today’s stock price, narrowing down the price divergences between gold and silver to give investors a near-risk-free way to profit from this arbitrage situation. Chasing the tail end of the momentum left in Hecla Mining stock, a few institutional buyers were spotted entering the company.

Leading the way in recent purchases, SG Americas Securities decided to increase their holdings by 71.2% as of October 2024, netting their position at up to $1.6 million today, showing further institutional interest in the future of Hecla Mining stock.

GLD ETF: The Direct Way to Gain Gold Exposure

A day after Bank of America announced gold being the only safe haven left in today’s global market, McClarren Financial Advisors boosted their investment in the gold ETF by 54%.

Given the ETF’s 37.2% net performance over the past 12 months, this trend is expected to continue growing.

Considering a new catalyst, being in the Federal Reserve (the Fed) interest rate cuts, investors can see how inflation pressures for the dollar can help dollar-quoted commodities like gold outperform based on currency weakness alone; then there is the demand side of the equation pushed from recommendations and historical behavior.

Knowing these trends are coming, nations like China, Turkey, and India have stockpiled the precious metal this year to bring their respective balance sheets into profitable territory when and if gold keeps making new all-time highs.

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Bank of America Sees Gold as the Last Safe Haven: Top 3 Picks

Bullish Momentum Isn’t Over for Barrick Gold Stock

Hecla Mining Stock Poised to Catch Up to Rising Gold Prices

GLD ETF: The Direct Way to Gain Gold Exposure

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