Tariff uncertainty and recession fears have kept investors on tenterhooks this year. While President Donald Trump has delayed his “reciprocal tariffs” and his administration is working on trade deals, there is still a lot of uncertainty over tariffs. 

For instance, last week, Trump talked about a 50% tariff on imports from the European Union, which he soon delayed to July 9. The macroeconomic environment is also quite volatile, with the U.S. recently losing its only remaining top credit rating. While usually investors find solace in assets like the U.S. dollar and Treasurys during periods of crisis, both have lost their sheen thanks to the ever-rising U.S. debt pile. 

Gold Prices Might Move Higher

One asset that has done well this year is gold (GCM25), in part due to its safe-haven appeal. While a section of the market has been pivoting to Bitcoin (BTCUSD) amid the uncertainty, others have been hooked to gold. Along with retail investors, institutional investors, as well as global central banks, have doubled down on gold amid the turmoil.

While gold prices have come off their record highs, most brokerages see the precious metal heading higher by the end of this year, with Goldman Sachs predicting prices to rise to $3,700 per troy ounce by the end of this year.

The macro environment is quite supportive for gold, barring perhaps the still-high interest rates that lower gold’s appeal (in theory) as it is a non-interest-bearing asset. However, gold has done remarkably well over the last couple of years despite high interest rates.

What Makes Gold Mining Stocks an Attractive Bet

Given the current market environment, it would be prudent to have a higher allocation to gold than in normal circumstances. While gold exchange-traded funds (ETF) like the SPDR S&P Gold ETF (GLD) are one way to get a pure-play allocation to the yellow metal, gold mining companies and the ETFs that invest in them are an alternative. 

The share prices of gold mining companies tend to track gold, with the catch that the movement tends to be a lot more extreme on either side, which makes them a leveraged trade on gold. 

Moreover, while being a “non-yielding” asset is one of gold’s drawbacks, many gold mining companies also pay dividends, with some boasting attractive yields as well. I find Anglogold Ashanti (AU) a good stock to play gold prices here. The company also pays generous dividends, which are linked to its free cash flows.

Should You Buy Anglogold Ashanti Stock?

Over the last couple of years, Anglogold Ashanti has been working on lowering its cost base. During the Q1 2025 earnings call, it said that since mid-2021, its cash costs have risen by just about 1% adjusted for U.S. inflation, while the corresponding number for its peer group was 20% on average.

During Q1, its all-in sustaining costs (AISC) were $1,640 per troy ounce at the group level, which is quite healthy. The company expects its group AISC to be between $1,580-$1,705 per troy ounce in 2025 and 2026.

Thanks to the steep rally in gold prices and the accompanying free cash flow bonanza, Anglogold Ashanti had a net debt of just $525 million at the end of Q1. The company’s net debt fell 60% year-over-year in the quarter, and its adjusted net debt-to-earnings before interest, tax, depreciation, and amortization (EBITDA) was a mere 0.15x.

The stock trades at a next 12-month (NTM) enterprise value (EV)-EBITDA multiple of 4.92x, which looks quite attractive compared to its peer group as well as historical averages. While the valuation multiples of commodity producers tend to be lowest at the cyclical top, we might not have yet hit a peak on gold, and high prices look here to stay.

While Anglogold stock has run up slightly ahead of its mean target price of $43.30 after the stellar YTD rally, I would keep the stock on my watchlist and buy any dip in the stock as gold whipsaws on tariff news. While the precious metal is lower today, the medium- to long-term outlook looks quite strong.

Anglogold Ashanti’s Dividend Policy

During its Q1 earnings call, Anglogold outlined a new dividend policy. The company will pay a quarterly dividend of $0.125 per share. In addition, at the end of the year, it will top up the dividend to pay 50% of its free cash flow to investors. If gold prices continue at these levels, Anglogold investors can expect a juicy payout.

Analysts expect AU to generate free cash flows of $1.72 billion in 2025. Based on the 50% payout the company is targeting, we get a forward dividend yield of 3.9%, which is quite healthy. Overall, for someone looking to add a high-dividend gold mining stock to their portfolio, Anglogold looks like a good bet.