In this article, we discuss the 10 precious metals stocks to buy amid market volatility. If you want to skip our detailed analysis of these stocks, go directly to the 5 Precious Metals Stocks to Buy Amid Market Volatility.
Over the past few months, the prices of precious metals like gold had been on an upward trajectory as inflation fears crowded the stock market and increased interest in gold as a hedge. However, they started declining as speculation around the rise in interest rates gained pace. Outflows from gold-related ETFs also helped push gold prices lower. Central bank purchases remained slow as well as the rise of a new COVID-19 variant caused further uncertainty at the market. Supply chain issues hit the supply of other precious metals like silver and palladium.
Gold had ended 2021 at a price of around $1,820 per ounce, a gain of almost 4.4% in the fourth quarter of 2021. This gain was largely due to a surge in demand for gold in countries like India where jewelry posts strong numbers towards the end of the year. However, overall, gold prices dropped by more than 6% through the year. In 2022, the overall environment for precious metals is likely to remain challenging as the Fed tightens monetary policy and inflation touches peak value in the coming months.
This macro-economic environment has created some opportunities for shrewd investors. Growth-heavy portfolios that are overexposed to stocks during this volatile period can look towards gold as a solid hedge against inflation and reduce some of the risk associated with their investments. Precious metals also offer better protection against inflation compared to Bitcoin, evidenced by the increased volatility in the prices of digital coins over the past few weeks as the market reacts to a broad correction in value of growth stocks.
For those who do not want direct exposure to gold, there are several precious metal stocks that can offer a viable alternative and also pay handsome dividends. In a high interest rates environment, these stocks can be akin to gold in some cases. Some of the top precious metals stocks to buy now include Freeport-McMoRan Inc. (NYSE:FCX), Nucor Corporation (NYSE:NUE), and Wheaton Precious Metals Corp. (NYSE:WPM), among others discussed in detail below.
Our Methodology
The companies that operate in the precious sector and are best positioned to offer investors some solidity amid rising market volatility 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.
Data from around 900 elite hedge funds tracked by Insider Monkey was used to identify the number of hedge funds that hold stakes in each firm.
Precious Metals Stocks to Buy Amid Market Volatility
10. Perpetua Resources Corp. (NASDAQ:PPTA)
Number of Hedge Fund Holders: 8
Perpetua Resources Corp. (NASDAQ:PPTA) operates as a mineral exploration firm. The company has been in the spotlight as one of the stocks that billionaire John Paulson is most bullish on. Perpetua Resources Corp. (NASDAQ:PPTA) is working on one of the most compelling gold projects in the market and has no debt. At the end of September 2021, the firm had nearly $56 million in cash, equating to a cash runway of around 23 months.
Perpetua Resources Corp. (NASDAQ:PPTA) is an early-stage firm and is focused mostly on gold, although it does plan to explore for other precious metals as well. Investment banks like B Riley and HC Wainwright were constructive on the stock towards the end of last year.
Among the hedge funds being tracked by Insider Monkey, New York-based investment firm Paulson & Co is a leading shareholder in Perpetua Resources Corp. (NASDAQ:PPTA) with 24 million shares worth more than $123 million.
At the end of the third quarter of 2021, 8 hedge funds in the database of Insider Monkey held stakes worth $152 million in Perpetua Resources Corp. (NASDAQ:PPTA), up from 3 in the previous quarter worth $184 million.
Just like Freeport-McMoRan Inc. (NYSE:FCX), Nucor Corporation (NYSE:NUE), and Wheaton Precious Metals Corp. (NYSE:WPM), Perpetua Resources Corp. (NASDAQ:PPTA) is one of the stocks on the radar of investors amid increased market volatility.
9. POSCO (NYSE:PKX)
Number of Hedge Fund Holders: 11
POSCO (NYSE:PKX) is a South Korean firm that markets steel products. It has gained prominence in the finance world as one of the top holdings in the Charlie Munger portfolio. Munger is one of the most famous value investors in the world and a close friend to Wall Street titan Warren Buffett. Apart from interests in the steel business, POSCO (NYSE:PKX) also constructs industrial plants and commercial buildings.
In early December 2021, POSCO (NYSE:PKX) announced that it was teaming up with automaker General Motors for securing access to materials used in electric vehicle batteries. POSCO (NYSE:PKX) already has an existing agreement for supply of cathodes to the latter.
Among the hedge funds being tracked by Insider Monkey, New York-based investment firm Pzena Investment Management is a leading shareholder in POSCO (NYSE:PKX) with 957,976 shares worth more than $66 million.
At the end of the third quarter of 2021, 11 hedge funds in the database of Insider Monkey held stakes worth $140 million in POSCO (NYSE:PKX), compared to 12 in the previous quarter worth $161 million.
8. Commercial Metals Company (NYSE:CMC)
Number of Hedge Fund Holders: 19
Commercial Metals Company (NYSE:CMC) is a Texas-based firm that markets steel and metal products. On January 11, BMO Capital analyst David Gagliano raised the price target on Commercial Metals Company (NYSE:CMC) stock to $40 from $34 and kept a Market Perform rating, highlighting the “better-than-expected” margins and resilient volumes of the firm in the quarterly earnings and noting that the stock was a “compelling investment” for exposure to the construction market.
In early January, Commercial Metals Company (NYSE:CMC) had announced that it would be constructing a “state-of-the-art” micro mill as part of a long-term growth plan to serve the markets in the Northeast, Mid-Atlantic, and Mid-Western United States.
Among the hedge funds being tracked by Insider Monkey, New York-based investment firm DE Shaw is a leading shareholder in Commercial Metals Company (NYSE:CMC) with 1 million shares worth more than $33 million.
At the end of the third quarter of 2021, 19 hedge funds in the database of Insider Monkey held stakes worth $181 million in Commercial Metals Company (NYSE:CMC), compared to 22 in the previous quarter worth $121 million.
7. Rio Tinto Group (NYSE:RIO)
Number of Hedge Fund Holders: 20
Rio Tinto Group (NYSE:RIO) operates as a diversified metals and mining firm. It is based in London. On January 24, the company had announced that it reached an agreement with the Mongolian government that would allow for the resumption of work on the Oyu Tolgoi copper mine. Rio Tinto Group (NYSE:RIO) plans to start underground operations at the site and envisions producing 500,000 metric tons of copper per year through the mine.
Rio Tinto Group (NYSE:RIO) stock has also jumped as China eases emissions cutbacks in the steel industry, leading to a jump in iron ore prices that topped $150 per metric ton, the highest seen in five months. The Chinese government has set 2030 as the new date for peak emissions in the sector, against an earlier target set for 2025.
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 13.3 million shares worth more than $892 million.
At the end of the third quarter of 2021, 20 hedge funds in the database of Insider Monkey held stakes worth $1.3 billion in Rio Tinto Group (NYSE:RIO), compared to 21 in the previous quarter worth $1.4 billion.
6. MP Materials Corp. (NYSE:MP)
Number of Hedge Fund Holders: 20
MP Materials Corp. (NYSE:MP) is a Las Vegas-based firm with interests in rare earth mining and processing. Rare earth metals are used in the manufacture of some of the most popular consumer electronics and electric cars. In November, Bank of America analyst Lawson Winder had initiated coverage of MP Materials Corp. (NYSE:MP) stock with a Buy rating and a price target of $52, noting that the firm was a “critical” raw materials supplier to the EV industry. The analyst singled out the firm as a “unique, high quality” rare earths producer.
MP Materials Corp. (NYSE:MP) also stands to benefit as the US Senate mulls limiting American companies from sourcing their rare earth needs from Chinese firms. If a law is passed in this regard, MP Materials Corp. (NYSE:MP) would witness more growth in business.
At the end of the third quarter of 2021, 20 hedge funds in the database of Insider Monkey held stakes worth $2.1 billion in MP Materials Corp. (NYSE:MP), the same as in the preceding quarter worth $2.5 billion.
In addition to Freeport-McMoRan Inc. (NYSE:FCX), Nucor Corporation (NYSE:NUE), and Wheaton Precious Metals Corp. (NYSE:WPM), MP Materials Corp. (NYSE:MP) is one of the stocks that hedge funds are keeping their eye on amid market volatility.
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Disclosure. None. 10 Precious Metals Stocks to Buy Amid Market Volatility is originally published on Insider Monkey.
