Gold shines again. Most active February gold futures (GCG26) briefly topped $5,100 on January 26, while spot prices hit new highs. Even after the drawdown, gold is already up 28% year-to-date (YTD). It hit new highs as investors flocked to the safe-haven appeal of the metal. With global political tensions simmering, currencies under pressure and political uncertainty swirling, the environment is lining up perfectly in favor of gold, especially as confidence begins to falter.

The demonstration is not led by a single group. Central banks continue to load up as they diversify reserves, exchange-traded fund (ETF) inflows have turned positive again, and a new wave of retail investors in Asia and Europe are getting into precious metals for the first time. Add in the fact that the Federal Reserve is expected to hold rates steady, while facing intense political scrutiny, and the setup continues to support a non-yielding asset like gold. Having soared by this year’s teenagers already on top of last year’s massive gains, the momentum clearly hasn’t faded.

Wall Street believes there may be more upside ahead. Some, such as Societe Generale, predict that the price of gold will be $6,000 per ounce by the end of the year. Others, such as Morgan Stanley, see the rally extending further, anticipating prices to $5,700/oz.

That’s pushing investors to look beyond the bullion itself and toward the “picks and shovels” of the trade: mining heavyweights like Vale SA ( VALE ) and Rio Tinto Group ( RIO ), both of which are at recent highs. With gold breaking records, is now the time to buy Barchart’s top rated gold stocks or wait for a better entry point?

Founded in 1942 and headquartered in Rio de Janeiro, Vale SA is one of the world’s mining heavyweights, with operations spanning the Americas, Europe and Asia. Best known for iron ore, Vale also plays a key role in nickel and copper, while producing valuable by-products such as gold group metals, silver (SIH26) and platinum (PLJ26). Its reach goes far beyond the pit, passing railways, ports and terminals that keep materials moving. Through its energy transition segment, Vale is also investing in renewable energy, positioning itself for a more sustainable mining future.

Valued at a market capitalization of $76 billion, gold mining stocks had a stellar rally. VALE shares are up 90% over the past 52 weeks, hitting a recent high of $17.34. The rally looks even sharper when you zoom in: VALE is up 112% from its April low of $8.06. The momentum hasn’t cooled much either, with gains of 46% over the past three months and another 33% rally in the past month alone.

That said, the 14-day RSI for VALE stock now sits above 72, firmly in overbought territory, suggesting that a short-term pause or consolidation wouldn’t be surprising after such a strong move.

From a valuation point of view, VALE does not stretch. The stock is priced at about 7.7 times forward adjusted earnings, cheaper than the industry average, even if it’s slightly above its own historical average.

What really keeps investors close, though, is the dividend story. Vale has paid dividends for years, and its high yield of 5.3% far beats the 1.05% yield of the SPDR S&P 500 ETF Trust ( SPY ).

Gold may be stealing the limelight, but Vale’s latest numbers were impressive. When the Brazilian mining giant reported third-quarter results on Oct. 31, performance beat expectations across the board. Net profit came in at $2.69 billion, up 11% year-over-year (YOY), while net operating income rose 9% year-over-year to $10.4 billion and rose 18% sequentially. That momentum flowed directly to the bottom line, with adjusted EBITDA rising 21% year over year to $4.4 billion, comfortably ahead of forecasts.

Cash generation was equally impressive. Recurring free cash flow reached $1.6 billion, up roughly $1 billion from last year, driven by stronger operating profits. Total free cash flow rose 337% year-over-year to $2.6 billion, boosting cash and equivalents to $5.9 billion at the end of the quarter. At the same time, extended net debt fell slightly sequentially to $16.6 billion, reflecting disciplined capital management.

Operationally, Vale delivered. Sales of iron ore, copper and nickel were up 5%, 20% and 6% year-over-year, respectively. Iron ore production reached its highest quarterly level since 2018, while copper posted its third strongest quarter since 2019. Nickel costs continued to improve, strengthening Vale’s competitiveness in key metals, including gold byproducts.

Capital spending came in at $1.3 billion, down slightly from last year and on track with its 2025 guidance of a range of $5.4 billion to $5.7 billion. The company also moved forward with growth initiatives under its New Carajás program and ramped up Onça Puma’s second furnace. With projects like Serra Sul and Bacaba copper on deck, and safety milestones met, Vale looks increasingly well positioned for the next phase of the cycle.

Vale will soon release results for the current fiscal year. EPS for the year is expected to increase 15% year-over-year to $2.09. Heading into fiscal 2026, bottom line is expected to increase 1% annually to $2.11 per share.

Analysts covering VALE are bullish on the mining stock, with an overall “Moderate Buy” rating. Out of the 17 analysts, nine are bullish and give a “Strong Buy” rating, one suggests a “Moderate Buy” and the remaining seven analysts are safe with a “Hold”.

The recent run in VALE stock has already lifted it above the average Street target of $14.65, indicating strong momentum. Still, the more bullish target of $18 leaves room for around 7% potential from here.

Founded in 1873, London-based Rio Tinto is one of the world’s most established mining groups, with operations spanning all major regions. The company’s portfolio is deep, from iron ore in Western Australia to aluminium, copper and a growing mix of critical minerals.

Along the way, Rio produces valuable byproducts, such as gold and silver, while also expanding into battery materials such as lithium. With its own mines, smelters, refineries and shipping assets, Rio Tinto controls the entire value chain, giving it scale, resilience and long-term relevance in commodity cycles. Its market capitalization currently stands at $117 billion.

Rio Tinto shares have been gaining momentum. RIO shares are up 60% over the past 52 weeks and recently hit a high of $97.11. The move hasn’t been short-lived, either: In the past six months alone, the stock is up 54%, reflecting strong investor confidence. Almost a month into the new year, RIO is already up 20% year-to-date (YTD), including a sharp 10% jump in just the past five days, helped by rising gold prices.

Technically, trading volume has been increasing, while the 14-day RSI has just entered overbought territory, suggesting that momentum remains strong but could cool off in the short term.

Even after a strong rally, RIO’s valuation still looks reasonable. Priced at an adjusted forward earnings multiple of 12.5x, the stock looks attractive compared to its sector average. A PEG ratio of 0.95 suggests that earnings growth is keeping pace with valuation, leaving room for more upside if commodity prices, particularly gold, remain favorable.

Meanwhile, Rio Tinto hasn’t forgotten about income investors. The miner has paid dividends semi-annually like clockwork for years, rewarding patience along the way. Its latest payout of $1.48 per share in September brings annual dividends to $3.73, which translates to a solid 4% yield, comfortably ahead of SPY’s returns.

Rio Tinto’s recent performance shows a company firing on multiple cylinders, combining consistent financial execution with significant growth across its portfolio. For the first six months of 2025, Rio Tinto reported revenue of $26.9 billion, while operating profit reached a solid $7 billion and operating cash flow reached $6.9 billion. With aluminum and copper contributing a larger part of the mix, margins are beginning to expand, giving a noticeable boost to the earnings profile.

Cash flow strength has been shown in capital discipline. The miner maintained its long-standing practice of an interim payout of 50%, declaring an ordinary dividend of $2.4 billion, while funding growth projects and protecting a strong balance sheet.

Operationally, it gained momentum. In January, Rio released fourth-quarter production numbers that highlighted record iron ore production in the Pilbara, marking a strong rebound from previous weather disruptions. Simandou also achieved a major milestone with its first shipment, strengthening Rio’s ability to deliver large-scale growth projects on time.

Copper remains a standout. Annual production rose 11% year-on-year, beating the high end of guidance, boosted by completed underground development at Oyu Tolgoi. Bauxite output hit record levels, aluminum operations showed resilience across the value chain and lithium delivered record quarterly production from Argentina as Rio builds its battery materials footprint.

Looking ahead, Rio expects production to grow at a compound annual growth rate (CAGR) of 3% between 2024 and 2030. Lower unit costs, improving margins and growing volumes point to stronger free cash flow and healthier credit metrics.

Rio Tinto is preparing to release its fiscal 2025 earnings report on February 19. Analysts covering the company expect its EPS to be around $6.53 in FY2025, and then rise 13% year-over-year to $7.39 in FY2026.

RIO stock has a “Moderate Buy” rating based on the consensus estimate of 14 analysts. Of these analysts, eight recommend a “Strong Buy,” while six are on the sidelines with a “Hold” rating.

RIO stock is currently trading above the average target price of $81.83. However, the Street-high target of $113 suggests that RIO could rise as much as 20% from here.

As of the date of publication, Sristi Suman Jayaswal did not hold (directly or indirectly) any positions in any of the securities mentioned in this article. All information and data in this article is for informational purposes only. This article was originally published on Barchart.com