By Maksym Misichenko · Yahoo Finance ·
What AI agents think about this news
The panel consensus is bearish on AU and AEM, with key risks being rising All-In Sustaining Costs (AISC), potential Fed rate hikes, and reserve depletion. While de-dollarization is seen as a long-term tailwind, near-term gold momentum is broken, and miners are exposed to macro-driven selling.
Risk: Rising All-In Sustaining Costs (AISC) and potential Fed rate hikes
Opportunity: Long-term tailwind from de-dollarization
This analysis is generated by the StockScreener pipeline — four leading LLMs (Claude, GPT, Gemini, Grok) receive identical prompts with built-in anti-hallucination guards. Read methodology →
Precious metals, which were the best-performing asset class in 2025, have been under pressure this year. The sharp decline in gold (GCQ26) and silver prices (SIN26) has taken a toll on the share prices of companies that mine them. Looking at some of the gold miners, both Anglogold Ashanti (AU) and Agnico-Eagle Mines (AEM) have fallen nearly 40% from their 2026 highs and are in a deep bear market.
In my previous article in March, I had noted that Anglogold Ashanti was a buy after the dip at that time. The stock recovered subsequently but has since plunged below that level. Now let's analyze whether it’s time to double down on gold mining stocks or whether more pain lies ahead.
Gold peaked above $5,500 per troy ounce in January but has since fallen to around $4,100. Several factors have driven gold lower; for instance, inflation has risen over the last few months amid the spike in energy prices. U.S. retail inflation as measured by the consumer price index (CPI) rose at an annualized pace of 4.2% in May, which was the highest in three years. Inflation has been above the Fed’s 2% target for more than five years now, and the possibility of it falling below that threshold looks dim in the near term. Meanwhile, according to the U.S. government, the economy has been on a solid footing, and the labor market has been quite healthy despite fears of artificial intelligence (AI) led layoffs. A resilient economy and high inflation make the case for an interest rate hike.
Meanwhile, the Fed has been on a rate-cutting spree since September 2024 and last cut rates by 25 basis points in December 2025. Until about a few months back, the discussion was whether the Fed would cut rates further or stay put. However, we are now in a scenario where markets are debating whether the next interest rate move could actually be upwards. Notably, fewer than a third of the traders on the CME FedWatch tool see the Fed funds rate at current or lower levels by the end of this year, while the remainder see it going higher. Rising interest rates are theoretically negative for gold, which is a non-interest-bearing asset and therefore loses out to interest-bearing assets in periods of high interest rates.
While it might sound counterintuitive, gold has fallen whenever tensions of the U.S.-Iran war have escalated this year. Usually, we would expect the safe-haven asset to do well in periods of geopolitical turmoil, but gold seems to have different plans this year.
While gold prices have crashed over 20% from the peak, I believe the structural drivers stay intact. First, there is the de-dollarization drive of central banks as they diversify their reserves beyond the greenback. The continued increase in U.S. debt and the unsustainable fiscal deficit cost the world’s biggest economy its only top credit rating last year, and there looks to be no path towards a sane fiscal environment.
According to the European Central Bank’s (ECB) report, gold accounted for 27% of global official foreign reserves last year while the share of U.S. Treasuries fell to 22%. While there is a valuation angle here as the rising gold price has meant that its share in reserves has risen, the ECB’s survey shows that “central banks hold gold not only for diversification but also as a hedge against geopolitical risk.”
Central banks should keep adding gold to their reserves, and I expect them to hasten their purchases to capitalize on the recent correction in prices. There could be some gold selling by a few central banks to raise money amid the current environment where many economies are struggling due to soaring energy prices. But overall, central bankers should continue to be net buyers as they have been in the first four months of the year, according to World Gold Council data. Gold’s investment demand is also a structural story even though there can be intermittent periods of selling pressure. Notably, both retail and institutional investors have been piling into gold for hedging purposes.
Should You Buy Gold Mining Stocks?
Gold mining stocks are a leveraged play on gold prices and tend to rise or fall more than the precious metal. Thanks to the rise in gold prices over the last couple of years, gold mining companies have rock-solid balance sheets, and both AEM and AU have a net cash position, which essentially means that the cash on their balance sheet exceeds the debt they owe.
While gold prices might stay volatile, I don’t see much downside from here. I added to my positions in AU earlier this year when it tumbled amid the gold price crash and intend to add more shares amid the current meltdown. The risk-reward looks quite favorable for gold mining stocks at these levels, and I see them as literal “gold mines” that can deliver stellar returns for investors who can stomach short-term volatility.
On the date of publication, Mohit Oberoi had a position in: AU. All information and data in this article is solely for informational purposes. This article was originally published on Barchart.com
Four leading AI models discuss this article
"Higher rates and absent geopolitical bid create more downside for leveraged gold miners than the article's structural narrative admits."
The article's bullish case on AU and AEM rests on intact central-bank buying and de-dollarization, yet it underplays how a shift to Fed hikes—now priced by over two-thirds of CME FedWatch participants—could extend gold's 25% drop from $5,500. Miners' leverage amplifies this: a further 10-15% gold decline would likely push both stocks below their March lows despite net-cash balance sheets. Gold's failure to rally on U.S.-Iran tensions also signals that traditional safe-haven flows are absent, leaving the sector exposed to macro-driven selling rather than supported by structural demand alone.
Central banks could accelerate purchases on the dip exactly as they did after prior corrections, and any delay in rate hikes would quickly restore gold's momentum and produce outsized miner gains.
"Gold mining stocks can outperform on rising gold, but a sustained high-rate/high-dollar environment could crush margins and offset any metal rally, making the buy-now thesis fragile."
Interesting bullish framing: gold miners AU and AEM appear leveraged to a potential rise in gold amid sticky inflation and central bank demand; balance sheets look solid with net cash, potentially powering free cash flow if gold stabilizes. However, the article glosses over key risk: mining costs and capex are structurally sensitive, and a sustained higher for longer rate regime or a stronger dollar can pressure gold and miners simultaneously. Even if gold holds, the stocks’ earnings and cash flow could deteriorate if production or grades decline. The call to buy now ignores the typical 12 to 18 month mining cycle and operational execution risk.
The strongest counterpoint is that even with net cash, miners face rising sustaining capex and cost pressures; a protracted rate shock or dollar strength could keep gold rangebound or decline, undermining the bull case and leaving valuations expensive unless a meaningful metal rally occurs.
"Gold mining stocks currently face severe margin compression risk from rising energy costs and a hawkish Fed that outweighs the long-term central bank diversification thesis."
The article conflates 'structural' demand with short-term price action, ignoring the primary headwind: real interest rates. If the Fed pivots to hikes to combat 4.2% CPI, the opportunity cost of holding non-yielding gold becomes prohibitive. While AU and AEM have strong balance sheets, their valuations are highly sensitive to All-In Sustaining Costs (AISC). If energy prices remain elevated, margin compression is inevitable, even if gold holds at $4,100. I am neutral on the sector; the 'de-dollarization' narrative is a long-term tailwind, but it is currently being overwhelmed by a hawkish Fed cycle that makes miners a falling knife until the rate trajectory stabilizes.
If central bank buying accelerates to offset fiscal deficit concerns, gold could decouple from real yields, turning these miners into massive alpha generators as they trade at historically low multiples.
"Central bank de-dollarization is a multi-year tailwind, but it doesn't override near-term Fed policy risk, and mining stocks are down 40% because the market is already pricing in rate hikes—not because the thesis broke."
The article conflates two separate theses—structural central bank demand for gold versus tactical timing of mining stocks—without reconciling them. Yes, de-dollarization is real and long-term bullish for gold. But the author ignores that mining stocks have already priced in much of this thesis after the 2024-early 2025 rally. AU and AEM are down 40% from 2026 highs, but that's from an inflated peak, not from intrinsic value. The real problem: if the Fed actually raises rates (which the article itself flags as increasingly likely), gold headwinds persist regardless of central bank buying. Mining stocks are levered plays on gold price, not on reserve diversification—and near-term gold momentum looks broken.
If the Fed does hike and real yields rise materially, gold could fall another 15-25% from here, dragging AU and AEM down with it despite structural tailwinds. The author's 'I don't see much downside' is precisely the kind of capitulation call that precedes further pain.
"Central-bank buying can blunt real-rate headwinds, shifting primary risk to AISC inflation for the miners."
Gemini correctly flags real-rate pressure from potential Fed hikes, but the argument underweights how central-bank flows have repeatedly overridden yield signals during 2018-2019 and 2022 tightening episodes. That same dynamic could limit further downside in gold even if CPI stays at 4.2%, leaving AU and AEM exposed mainly to AISC inflation rather than outright price collapse. The two risks interact directly: higher energy costs erode the net-cash buffer faster than the article admits.
"Miners' margin risk from higher AISC/capex beats the de-dollarization tailwind; a Fed-rate path can depress cash flow even if gold holds, leaving AU and AEM vulnerable."
Claude's takeaway hinges on de-dollarization shielding gold from rate shocks; but the real risk is cost discipline. Even if gold holds, AU and AEM face rising All-In Sustaining Costs and sustaining capex, eroding margins when energy and labor costs move higher. A Fed hike regime plus commodity input inflation can depress cash flow and re-rate miners, regardless of macro tailwinds. Until gold proves a durable rally, the stocks look vulnerable on margin risk.
"Structural production decline and rising strip ratios pose a greater risk to miner margins than macro-driven gold price fluctuations."
Gemini and Grok are obsessing over central bank flows and real rates, but both miss the micro-level reality of reserve depletion. AU and AEM are not just macro proxies; they are aging assets. Even if gold stays elevated, these miners face declining head grades and rising strip ratios, which permanently inflate AISC regardless of energy prices. The 'net cash' balance sheet is a temporary buffer, not a structural solution to the inevitable production death spiral facing these major miners.
"Reserve depletion is a 5-10 year structural risk; Fed policy is the 6-month catalyst that determines whether AU/AEM survive to face it."
Gemini's reserve depletion argument is the hardest to dismiss, but it conflates two timelines. AU and AEM face real AISC headwinds over 5-10 years; that's structural. But the near-term catalyst is Fed policy, not geology. If gold rallies 15-20% on a pivot signal within 6 months, these miners re-rate sharply regardless of declining grades. The death spiral is real—just not the binding constraint right now. Timing matters more than the ultimate thesis.
The panel consensus is bearish on AU and AEM, with key risks being rising All-In Sustaining Costs (AISC), potential Fed rate hikes, and reserve depletion. While de-dollarization is seen as a long-term tailwind, near-term gold momentum is broken, and miners are exposed to macro-driven selling.
Long-term tailwind from de-dollarization
Rising All-In Sustaining Costs (AISC) and potential Fed rate hikes