In this article, we discuss the 10 best gold stocks to buy for inflation. If you want to read about some more gold stocks, go directly to 5 Best Gold Stocks to Buy for Inflation.
Interest in gold has steadily increased in the past few months as inflation surges, interest rates rise, and some sections of the Treasury curve invert. All these factors tend to lead to outperformance for the gold sector, per historical data. In the first three months of 2022, after a below average performance in 2021, gold prices increased by a handsome 8%, the best quarterly performance for the precious metal since the second quarter of 2020. Inflows into gold ETFs also totaled $17 billion during the period, the highest since the third quarter of 2020.
The record rally in the prices of gold over the past three months, during which gold climbed above $2,000/oz, were primarily driven by rising inflation, increased geopolitical risk due to the Russian invasion of Ukraine, and a hawkish Federal Reserve. In this overall economic environment, in which oil prices have also reached record highs, investors have been flocking to safe havens like gold amid market volatility. The global economic recovery is being affected by these factors and this has led to fears around stagflation as well.
Data from the US Mint reveals that gold coin sales were around $427 million in March, pushing the total coin sales in the first quarter of 2022 to more than $1 billion. This is the highest sales volume for gold since 1999. Investors eager to profit from this boom for the gold sector should consider some of the top gold stocks to buy for inflation according to hedge funds that include Newmont Corporation (NYSE:NEM), Barrick Gold Corporation (NYSE:GOLD), and Freeport-McMoRan Inc. (NYSE:FCX).
Our Methodology
The companies that operate in the gold sector and are best positioned to offer investors some solidity amid rising inflation were selected for the list. The business fundamentals and analyst ratings for these firms are also discussed to provide readers with some additional context for their investment choices. An extensive database of around 900 elite hedge funds tracked by Insider Monkey was used to quantify the hedge fund sentiment around each stock.
Best Gold Stocks to Buy for Inflation
10. Gold Fields Limited (NYSE:GFI)
Number of Hedge Fund Holders: 13
Gold Fields Limited (NYSE:GFI) is a South Africa-based gold producer. The company does not have an impressive dividend history but is trying to build one. On March 9, it declared a quarterly dividend of $0.139 per share, in line with previous. The stock has benefited from the record rally in gold prices over the past few weeks that pushed the price of the precious metal above $2000/oz in early March. The prices of gold have not touched these highs for nearly seventeen months. Inflationary pressures have also helped gold firms improve their margins.
On April 4, JPMorgan analyst Dominic O’Kane gave Gold Fields Limited (NYSE:GFI) stock a Neutral rating with a price target of $15.30. BMO Capital has a Market Perform rating on the stock with a price target of $15.
Among the hedge funds being tracked by Insider Monkey, New York-based investment firm Renaissance Technologies is a leading shareholder in Gold Fields Limited (NYSE:GFI) with 7 million shares worth more than $77 million.
Just like Newmont Corporation (NYSE:NEM), Barrick Gold Corporation (NYSE:GOLD), and Freeport-McMoRan Inc. (NYSE:FCX), Gold Fields Limited (NYSE:GFI) is one of the stocks that hedge funds have on their radar as inflation rises.
9. Hecla Mining Company (NYSE:HL)
Number of Hedge Fund Holders: 19
Hecla Mining Company (NYSE:HL) is a precious metals mining firm. On April 12, the company posted preliminary production numbers from the first quarter of 2022, estimating that it produced 41,642 oz of gold and 3.3 million oz of silver during the period. The largest producer for Hecla in this timespan, Greens Creek, produced 2.4 million oz of silver and over 11,000 oz of gold, up slightly quarter-over-quarter due to higher grades. On February 23, the firm had declared a quarterly dividend of $0.0063 per share, an increase of $0.8% from the previous dividend.
On April 12, Roth Capital analyst Joe Reagor gave Hecla Mining Company (NYSE:HL) stock a Neutral rating with a price target of $6.50, noting that higher base metal prices were offsetting production woes for the firm in the near-term.
At the end of the fourth quarter of 2021, 19 hedge funds in the database of Insider Monkey held stakes worth $128 million in Hecla Mining Company (NYSE:HL), up from 15 in the preceding quarter worth $101 million.
8. Royal Gold, Inc. (NASDAQ:RGLD)
Number of Hedge Fund Holders: 28
Royal Gold, Inc. (NASDAQ:RGLD) purchases and manages precious metal streams, royalties, and related interests. On February 16, the company posted earnings for the second fiscal quarter of 2022, reporting earnings per share of $1.05, beating estimates by $0.14. The revenue over the period was more than $168 million, beating expectations by $7.6 million. The company will post guidance for 2022 in the coming weeks. In November, the firm had raised the quarterly dividend by close to 17% to $0.35 per share.
Royal Gold, Inc. (NASDAQ:RGLD) posted quarterly production recently, reporting a volume of more than 93,000 Gold Equivalent Troy Ounces (GEOs), up from around 84,000 GEOs from a year ago. The boost in production numbers came despite deferred ounces from Pueblo Viejo and slight delays at Khoemacau, two of the premier gold pipelines of the company.
Among the hedge funds being tracked by Insider Monkey, New York-based investment firm First Eagle Investment Management is a leading shareholder in Royal Gold, Inc. (NASDAQ:RGLD) with 3.5 million shares worth more than $369 million.
In its Q1 2021 investor letter, Argosy Investors, an asset management firm, highlighted a few stocks and Royal Gold, Inc. (NASDAQ:RGLD) was one of them. Here is what the fund said:
“Gold royalties business achieve 2 objectives for us: 1) It’s a good business model with strong returns through the gold price cycle; and 2) it provides some protection from inflation, should it materialize due to the increasingly loose fiscal and monetary policy decisions the United States (and other developed market economies) is making.
I don’t want to stay on my soapbox for too long, but this is the first time in history that I’m aware of politicians openly stating that debt levels don’t matter, even in the long term. In 2019, the government spent $4.4 trillion. Of those expenditures, $0.4 trillion was spent making interest payments on existing debt at the time of $16.9 trillion. The interest rate on that debt was 2.4%. Debt for 2021 is projected to increase to $22.5 trillion, and then to $33 trillion by the end of the decade.” (Click here to see full text)
7. Rio Tinto Group (NYSE:RIO)
Number of Hedge Fund Holders: 22
Rio Tinto Group (NYSE:RIO) is a diversified metals and mining firm. On April 8, at an annual general meeting, the chairman of the firm, Simon Thompson, said that climate change was “at the heart” of the new strategy of the company. As part of this plan, Rio Tinto Group (NYSE:RIO) will increase research spending to develop technologies that will help customers decarbonize. The company has also boosted spending around mining sites, like developing water treatment plants in Madagascar. Rio has submitted a bid to increase its stake in Turquoise Hill Resources too.
On April 11, Goldman Sachs analyst Geydar Mamedov upgraded Rio Tinto Group (NYSE:RIO) stock to Buy from Neutral and raised the price target to GBP 7,300 from GBP 5,460, noting the favorable mix of iron ore and base metals as one of the reasons behind the bullish outlook.
Among the hedge funds being tracked by Insider Monkey, Washington-based investment firm Fisher Asset Management is a leading shareholder in Rio Tinto Group (NYSE:RIO) with 13.5 million shares worth more than $907 million.
6. Wheaton Precious Metals Corp. (NYSE:WPM)
Number of Hedge Fund Holders: 24
Wheaton Precious Metals Corp. (NYSE:WPM) is a Canada-based firm that sells precious metals. The company has a solid dividend history stretching back close to one decade. In the past six years, these payouts have been growing consistently. On March 10, the firm declared a quarterly dividend of $0.15 per share, in line with previous. The forward yield was 1.22%. In early February, the company had entered into an agreement with Sabina Gold & Silver for a gold stream from the Goose Project in Nunavut.
On April 19, KeyBanc analyst Adam Josephson maintained an Overweight rating on Wheaton Precious Metals Corp. (NYSE:WPM) stock and raised the price target to $56 from $46, citing higher commodity prices as one of the reasons behind the target raise.
At the end of the fourth quarter of 2021, 24 hedge funds in the database of Insider Monkey held stakes worth $490 million in Wheaton Precious Metals Corp. (NYSE:WPM), compared to 27 in the previous quarter worth $347 million.
In addition to Newmont Corporation (NYSE:NEM), Barrick Gold Corporation (NYSE:GOLD), and Freeport-McMoRan Inc. (NYSE:FCX), Wheaton Precious Metals Corp. (NYSE:WPM) is one of the stocks that elite investors are monitoring as interest rates rise.
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Disclosure. None. 10 Best Gold Stocks to Buy for Inflation is originally published on Insider Monkey.
