Gold (GCZ25) prices, which just a few days ago were seen rising past $5,000 per ounce, have crashed and fallen below the $4,000 level. Amid the crash, gold mining companies, which were enjoying the rally of a lifetime, outperforming the precious metal by a wide margin this year, have fallen hard.
In my previous article, I noted that it made sense to book profits in Anglogold Ashanti (AU) after the stock had more than tripled in value this year. The stock is now nearing bear market territory, which by definition is a drawdown of 20% from the peak. In this article, we’ll examine whether AU stock is a buy after the recent crash.
Gold Prices Crash
Like any other mining company, AU’s outlook is driven more by the underlying commodity than by any company-specific factors. While gold has been rallying for the last two years, the last leg of the rise had all the ingredients of a FOMO rally. Gold looked ripe for a correction, and the yellow metal has pared gains even as it’s still outperforming the S&P 500 Index ($SPX) this year. I see the recent fall in gold as a healthy correction and don’t expect the prices to fall much below the $4,000 level.
Meanwhile, the long-term story for gold remains intact. The following are the structural bullish drivers for gold.
- De-dollarization: Central banks globally have been on a de-dollarization drive, which hit a key milestone when their collective gold holdings recently surpassed their U.S. Treasury holdings for the first time in three decades. While the U.S. dollar is still the largest reserve asset, gold has surpassed the Euro to claim the second spot in central bank holdings. Central banks have collectively bought over 1,000 metric tons of gold in the previous three years, and the buying spree has looked unstoppable in 2025 also. It is not only the usual suspects like China that are ditching Treasuries for gold, but traditional U.S. allies that are hoarding gold. For instance, Poland – which is the biggest gold buyer this year – has said that it would increase gold’s share in its international reserves to 30% after meeting its previous target of 20%.
- Lack of Trust in Fiat Currencies: The fiscal largesse since the COVID-19 pandemic has eroded trust in “fiat currencies” for many. U.S. gross national debt has surpassed $38 trillion. Things are not much better in other developed countries, as governments are struggling to cut down deficits. While some investors have pivoted to cryptocurrencies to diversify their portfolios, many others still find solace in gold, which is seen as the ultimate safe-haven asset.
- Loose Monetary Policy: We might be stepping into a period of accommodative monetary policy pretty much across the world. Inflation has not looked much of a risk even as U.S. inflation is still well above the 2% that the Federal Reserve targets. Lower interest rates are theoretically positive for gold as it is a non-yielding asset.
- Geopolitical Tensions: As countries like China and Russia actively push for a “new world order,” geopolitical tensions are expected to stay elevated in the near term. The geopolitical situation remains quite fragile, which is supportive of gold.
Anglogold Ashanti Stock Forecast
I find Anglogold Ashanti a good bet in the gold mining space. The company has addressed its legacy issues related to the balance sheet and portfolio quality. It should report negative net debt, which means more cash than debt on its balance sheet, when it releases its Q3 2025 earnings next month.
AU has also optimized its portfolio by selling stakes in some of its Tier 2 assets, which, by definition, have higher per-unit costs. At the same time, it has added Tier 1 assets, which have improved the overall quality of its portfolio and reserves. The combination of a strong balance sheet and better portfolio quality bodes well for AU’s valuation multiples, which are still at a discount to many of its peers.
AU Should Still Pay a Fat Dividend
AU has a generous dividend policy and currently pays a quarterly payout of $0.125 per share. Additionally, it is committed to topping up the dividend to pay 50% of its free cash flow to investors at the end of every year. Despite the recent fall in gold prices, investors can expect fat payouts for the back half of the year after the $0.80 interim dividend, which was paid last month.
Overall, I believe that given its healthy dividend yield and prospects of capital appreciation over the medium to long term, AU can find a place in portfolios of investors looking for a combination of dividends and capital gains. The stock could still see some weakness as gold prices try to find a bottom, but I believe at these levels, AU can be nibbled at while using further weakness to add more shares.
