Gold stocks look way stretched following a parabolic run. But Josh Brown sees one that can be bought

The metals and mining sector is experiencing its best year in 2025, with gold up 60% and silver 84%, driven by central bank demand, dollar weakness, and geopolitical tensions. While Newmont (NEM) and Southern Copper (SCCO) have seen significant gains but are now considered extended, AngloGold Ashanti (AU) stands out with a 226% YTD increase and strategic improvements. AU's relocation to the UK, primary NYSE listing, and subsequent inclusion in U.S. equity benchmarks like the Russell 3000 in June 2025 have broadened its investor base. Furthermore, a revamped dividend policy now commits 50% of free cash flow to shareholders with a minimum 50-cent quarterly payout, enhancing capital return transparency and making it an attractive, less extended play in the bullish gold market.

Analysis

The metals and mining sector is experiencing an exceptional year in 2025, with a 91% industry group gain, making it the best-performing sector. Gold prices have surged 60% and silver 84% year-to-date, primarily driven by robust central bank demand, a weaker dollar, and escalating geopolitical tensions. This macro environment provides significant tailwinds for precious metals miners.

While Newmont (NEM) and Southern Copper (SCCO) have seen substantial year-to-date gains of 151% and 49% respectively, both are now considered technically extended. NEM, for instance, trades 65% above its 200-day simple moving average, suggesting potential overextension despite expected strong EPS growth. SCCO also faces similar valuation concerns.

AngloGold Ashanti (AU) stands out with a 226% YTD return and is projected to be the fastest earnings grower with 157% EPS growth in 2025, alongside 149% free cash flow growth. Its strategic re-domiciling to the UK and primary NYSE listing led to inclusion in the Russell 3000 in June 2025, significantly broadening its institutional investor base. A new dividend policy committing 50% of free cash flow with a minimum 50-cent quarterly payout further enhances capital return transparency.

Unlike its peers, AU is not considered as technically extended and is currently consolidating gains, presenting a potentially more attractive entry point for investors bullish on gold. The stock's 50-day simple moving average has provided strong support, suggesting a defined technical level for risk management. Its improved fundamentals and broader market access position it favorably within the current bullish commodity cycle.

Key Decisions for Investors

• Investors should exercise caution with Newmont (NEM) and Southern Copper (SCCO) due to their currently extended technical valuations, potentially awaiting a significant pullback or consolidation.
• Consider AngloGold Ashanti (AU) as a more strategically positioned and less technically extended opportunity within the bullish gold sector, given its strong fundamental improvements, enhanced capital return policy, and increased institutional investor access.
• Implement a trailing stop at AU's rising 50-day simple moving average to manage risk, leveraging its historical technical support.
• Maintain strategic exposure to the broader metals and mining sector, recognizing the ongoing macro tailwinds from central bank demand, dollar weakness, and geopolitical tensions.