In this article we will list the 10 best gold mining stocks to buy according to Wall Street analysts.

Gold has reached an all-time high, capping a 20-month rally with a 50% increase. Although the selling pressure from the retail investor would have an adverse affect on gold prices, however, this surge is driven by central banks buying record volumes of bullion mainly due to the desire to reduce dependence on US dollar, conflicts in the Middle East, and strong demand from Chinese consumers amid disappointing local equities, property, and currency markets. Furthermore, Chinese political leaders noticed that financial assets of the Russian government including bonds and reserves got confiscated by Western governments after Russia invaded Ukraine. Christopher Mancini, who co-manages Gabelli Gold Fund says “The Chinese central bank saw that happened and said ‘We don’t want that to happen to us.’ It would make sense for them to want to significantly retire their [U.S.] dollar reserves. With gold, they don’t have to worry about being repaid. We know they have been buying a consistent amount of gold every day.”

Bernard Dahdah from Natixis suggests central banks might continue buying gold due to tensions between the US and China, potentially making prices above $2,300 the new norm. The move to gold also reflects a broader trend of nations reducing their reliance on the U.S. dollar, prompted by the dollar’s use as a geopolitical tool against Russia, leading to gold prices reaching an all-time high of $2,480 per ounce on July 17, 2024. In U.S. the Fed is expected to cut the Fed funds rate, but inflation may remain steady, leading to lower real interest rates. This scenario benefits gold as the opportunity cost of holding non-interest-bearing gold decreases compared to cash and bonds. Additionally, a decline in U.S. real interest rates may weaken the U.S. dollar, making gold, which is globally priced in dollars, more attractive.

Owning gold directly provides a “store of value” but offers limited returns rather than generate substantial gains like equities. However, other than its appeal in its ability to preserve value, many investors view it as a hedge against economic troubles rather than a high-return investment. So an investor otherwise seeking gold as a soaring investment would be disappointed in the longer term as it doesn’t appreciate by much as gold has risen less than 300% in a century with annualized real returns of 1.34%, adjusted for inflation. Therefore investors looking for a more aggressive approach, aim for gold mining stocks that provide leverage to the gold price that yields returns surpassing those of the underlying commodity.

Despite this leverage, the underlying stock valuations will consider future cash flows and market volatility of the gold as well as the consensus price estimates by market participants. Nonetheless, gold miner stocks should be more volatile than gold itself, offering greater returns if the investor’s thesis on rising gold prices is correct.

Regardless of gold prices rising over the last 15 years, gold mining ETFs and major miners (Agnico, Newmont, Barrick) have underperformed compared to physical gold. Although some companies covered in this article have succeeded, the gold mining sector requires careful scrutiny beyond just reserves and production. Like any other investment that is carefully analyzed mining companies need to be analysed based on management, capital allocation, and geopolitical risk. It is also because of these factors that gold mining companies are unable to reach their potential as viable investments.

Methodology

To curate our list of 10 Best Gold Mining Companies to Invest in, we gathered a list of all companies using the holdings of gold miners ETFs. We then further narrowed down on the basis of their upside potential. With this let’s now jump to our list of the 10 Best Gold Mining Companies to Invest in.

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10. Franco-Nevada Corp (NYSE:FNV)

Current Price: $125.71

Upside Potential: 11%

Franco-Nevada Corp (NYSE:FNV), a Canadian gold mining company, recently gained attention due to its strong Q1 performance. The company reported an adjusted EPS of $0.76, exceeding estimates by $0.05, although its revenue decreased by 7.1% year-over-year to $256.8 million, surpassing expectations by $7.77 million. Analysts consider Franco-Nevada less volatile compared to traditional gold miners due to its royalty and streaming model, which involves providing upfront capital to miners in exchange for discounted returns and lower-cost gold production rights. The company is also expanding its portfolio, holding over 400 assets. In 2023, Franco-Nevada acquired new royalty interests in Canada, Chile, Australia, and the US. For 2024, it anticipates producing 540,000 gold equivalent ounces, reflecting a 10% organic growth. The average analyst price target for Franco-Nevada is $143, indicating a potential upside of 15% from its current price.

White Falcon Capital Management stated the following regarding Franco-Nevada Corporation (NYSE:FNV) in its first quarter 2024 investor letter:

“Due to the rally in gold, the weight of precious metal royalty companies is on the higher side of our typical 10-15% allocation to them. We recently wrote an article for the Globe & Mail on Franco-Nevada Corporation (NYSE:FNV), a portfolio company, that can be accessed on our blog. We believe that royalties are a better way to express an opinion on gold as they pay a dividend and have optionality on both the price of gold as well as additional discoveries by operating companies. With debt and deficits increasing by the minute and the central bank’s inability to control inflation, we believe that it is prudent to have an ‘outside the system’ asset in the portfolio that can protect our purchasing power over time.”

9. Agnico Eagle Mines Limited (NYSE:AEM)

Current Price: $74.75

Upside Potential: 12%

Agnico Eagle Mines Limited (NYSE:AEM), a major player in the Canadian gold industry, manages mining operations across Canada, Finland, Australia, and Mexico, while also conducting exploration and development endeavors in the United States. The company adopts a strategy of retaining complete exposure to rising gold prices by abstaining from forward gold sales. Analysts have overwhelmingly endorsed the company’s shares, with an average Strong Buy rating. Agnico Eagle Mines Limited (NYSE) is a Canadian gold mining company with operations in Canada, Australia, Finland, and Mexico. In Q1 2024, its revenue soared to over $1.8 billion, a 21% increase from Q1 2023, driven by robust production from Canadian Malartic, Macassa, and Nunavut operations, and high gold prices. This resulted in a record $396 million in free cash flows, up 50%, and $1 billion in margins, largely due to the Detour Lake and Canadian Malartic mines.

However, the company anticipates an increase in all-in sustaining costs from $1,191 per ounce in Q1 2024 to between $1,200 and $1,250, which could impact profitability and cash flows. Agnico Eagle also increased its stake in Maple Gold Mines from 12% to 19.9% in June 2024 and is advancing projects like the Odyssey mine at the Canadian Malartic complex, expected to produce 500,000 ounces by 2030.

8. Wheaton Precious Metals Corp. (NYSE:WPM)   

Current Price: $58.53

Upside Potential: 13%

Wheaton Precious Metals Corp. (NYSE:WPM) is a highly profitable precious metals streaming company, boasting a trailing twelve-month profit margin of 52.92% as of May 2024. It sources gold, silver, palladium, and cobalt from 18 operating mines. The company is well-regarded for its strong performance and growth prospects. It projects gold production of 850,000 ounces through 2029 from both operating and developing projects, including Salobo, Antamina, and Blackwater. In Q1 2024, Wheaton saw a 31% increase in gold equivalent ounces and a 6% rise in realized gold prices, resulting in a $297 million sales value and an EPS of $0.36, surpassing analysts’ expectations.

Wheaton is also investing in high-growth projects like Tanami Expansion 2 and Cadia Block Caves, and benefits from Newmont’s recent acquisition of Newcrest, which is expected to yield $500 million in annual synergies by 2025. The stock has performed strongly, with gains of 17.85% over the past month, 25.7% year-to-date, and 38.3% over the last year.

7. Newmont Corporation (NYSE:NEM)    

Current Price: $47.36

Upside Potential: 14%

Newmont Corporation (NYSE:NEM) is the world’s leading gold producer, mining copper, silver, zinc, and lead as well. Its assets and operations include favorable mining regions in Africa, Australia, Latin America & Caribbean, North America, and Papua New Guinea. Founded in 1921, Newmont has been publicly traded since 1925 and is the only gold producer listed in the S&P 500.

Newmont Corporation (NYSE:NEM) reported an adjusted EPS of $0.55 per share in Q1 2024, up from $0.40 a year earlier. The increase was driven by higher gold production of 1.7 million ounces compared to 1.3 million ounces in the same period last year, and rising gold prices. This resulted in an adjusted net income of $630 million, a 97% increase year-over-year.

Following the acquisition of Newcrest, Newmont’s consolidated mineral reserves grew to 128 million ounces, a 40% increase from the previous year, making its reserves almost equal to the combined reserves of Barrick Gold and Agnico Eagle. This substantial reserve base underscores Newmont’s long-term strength and growth potential.

The new Goldrush mine, in which Newmont has a 38.5% stake, is also ramping up production, with an expected output of 130,000 ounces in 2024, potentially reaching 400,000 ounces by 2028.

Newmont offers a robust dividend, with an annual yield of 2.27%, paying out $0.25 per share in the first quarter of 2024. The company’s strong cash position, bolstered by $1.4 billion generated in the quarter due to higher gold prices, highlights its growth prospects.

The stock has risen 15.3% in the past month, with analysts setting a target price of $49.85, indicating a potential upside of 12.96% from its current price of $44.13. Additionally, there has been an increase of eight hedge fund holders, bringing the total investment to $925 million as of Q1 2024.

6. Kinross Gold Corporation (NYSE:KGC)

Current Price: $8.92

Upside Potential: 17.5%

Kinross Gold Corporation (NYSE:KGC) operates mines in the U.S., Brazil, Chile, Mauritania, and Canada. In Q1 2024, it produced 522,000 ounces of gold, benefiting from increased gold prices. The company achieved a per ounce profit margin of $1,088 by maintaining consistent sales costs. Kinross ended the quarter with $407 million in cash, generating $145 million in free cash flow, positioning itself well for debt repayment and future growth. The company is on track to meet its full-year production and cost guidance. Additionally, Kinross is expanding its portfolio by potentially acquiring a 75% stake in a project with Riley Gold, following a $20 million investment.