In this article, we will take a look at the 11 best gold penny stocks to buy now. To see more such companies, go directly to 5 Best Gold Penny Stocks to Buy Now.
Gold price fell on August 7 as bond yields edged higher amid expectations from some circles that the Federal Reserve might continue its rate-hike spree. The US dollar gaining ground also added to the gold price’s decline. Silver and other precious metals prices also fell. However, gold and precious metals had a strong month in July. It was due to hopes that the Federal Reserve might be near the end of its rate-hike cycle. Talking to CNBC, Edward Moya, senior market analyst at OANDA, said:
“I think the Fed are going to skip rate hike in the next meeting if we see inflation come down … gold prices could be range bound in the near-term, but it will eventually go higher to above $2,000 per ounce.”
Long-term analysts believe now might be the right time to pile into gold as sooner or later the Federal Reserve will stop and eventually cut interest rates, which will bode well for gold and precious metals. For example, recently, Greg Shearer, executive director of global commodities research at JPMorgan, said that falling yields in the US will be a major driver for gold prices once the Federal Reserve begins to slash interest rates. The analyst thinks gold could touch $2000 per ounce by year-end and also touch new highs in 2024 amid rate cuts. The analyst said the having exposure to gold and silver could perform as a “late cycle diversifier.” The analyst also noted that gold and silver are “quite agnostic” to soft or hard landing, as opposed cyclical commodities such as aluminum and copper which largely depend on economic scenarios.
The analyst said that he sees an “eagerness” to really buy in and diversify allocation away from currencies. He also believes that the changing geopolitical situation and the related risks have also increased governments’ appetite for gold.
JPMorgan has an average price target of $2,175 an ounce for bullion in the final quarter of 2024.
It’s interesting to see how analyst reports advising against having too much exposure to gold played out in hindsight. For example, Edward Jones in a February 2021 report had said that it’s not wise to allocate over 5% of your portfolio to gold and precious metals. The firm believed that gold does not provide strong income streams or dividends and it’s a highly volatile asset. The report at the time also said that the demand for gold was mostly fear-related and also comes from consumer purchases of jewelry, which Edward Jones said were falling due to economic reasons.
However, time and again gold has proven to be a solid diversifier and when the financial markets started to take a hit amid rising inflation, stock market declines and interest rate hikes in 2022, gold proved its mettle, especially in the backdrop of changing geopolitical situation.
While gold has been highly volatile over the past few months, it’s correlation to other asset classes and broader market indices still remains low. A report by Blanchard highlighted that “the long-term correlation from 1975 to 2015 between gold and the S&P 500 is 0.006 or 0.6%.” The report also answers the question of how much gold exposure your portfolio should have?
“Holding as much as 10% of your precious metals portfolio in gold has improved long-run performance returns, according to research from the World Gold Council. It helps investors manage risk and smooth returns, especially during periods of stock-market volatility or downturns. Many portfolio managers today are advising clients to hold up to 20% of their portfolio in precious metals, given the massive waves of uncertainty in today’s political and economic environment. Every investor has different levels of risk tolerance, and so the actual level of allocation is a matter of personal preference. As an investment, gold is considered a safe harbor that offers individuals the opportunity to preserve and grow wealth, especially when other asset classes aren’t performing as well. Gold acts as an insurance policy, a hedge against equity- market declines, and a vehicle to protect and grow wealth. This paid off for gold investors after the 2008 global financial crisis, when gold rose from $700 to $1,900.”
Photo by Fotis Nakos on Unsplash
Our Methodology
For this article we first used Yahoo stock screener to find penny stocks (stocks trading under $5 as of August 7) from the gold, silver and other precious metals segments. From the long list of stocks we got we picked 11 stocks with the highest number of hedge fund investors. We gauged hedge fund sentiment for each stock using Insider Monkey’s database of 943 hedge funds.
Best Gold Penny Stocks to Buy Now
11. Orla Mining Ltd. (NYSE:ORLA)
Number of Hedge Fund Holders: 10
Gold and minerals mining company Orla Mining Ltd. (NYSE:ORLA) is based in Canada. Orla Mining Ltd. (NYSE:ORLA) is up about 10% year to date. As of the end of the first quarter of 2023, 10 hedge funds in Insider Monkey’s database had stakes in Orla Mining Ltd. (NYSE:ORLA). The biggest stakeholder of Orla Mining Ltd. (NYSE:ORLA) was Prem Watsa’s Fairfax Financial Holdings which had a $72 million stake in the company.
In July Orla Mining Ltd. (NYSE:ORLA) jumped after the company said it was on track to meet its FY 2023 gold production guidance of 100K-110K oz.
Old West Management made the following comment about NovaGold Resources Inc. (NYSE:NG) in its Q4 2022 investor letter:
“The previous two mining companies are industry leaders with solid production. The next two companies have no production or revenue but are sitting on huge deposits. We were initially attracted to NovaGold Resources Inc. (NYSE:NG) because of the track record of success of company chairman and largest shareholder Thomas Kaplan. Kaplan has become a billionaire investing in silver and platinum mines in Bolivia and South Africa. Besides his investing in mining, he owns the world’s largest collection of Rembrandt’s works.
Novagold is co-owner of the Donlin mine in Alaska, along with Barrick Gold. The Donlin mine is on track to be one of the world’s largest gold mines with 39 million ounces of measured and indicated reserves with an average grade of 2.24 grams of gold per ton. A major hurdle is Donlin is located in a remote area of Alaska, and the estimated cost to bring the mine to production is $7.4 billion. That is a huge expense but at today’s gold price the mine has gross revenue potential of $72 billion. Obviously the higher the gold price goes the easier the decision to begin construction. The U.S. government is supportive of the project as are the local Alaska Native stakeholders. Novagold has $120 million of long term debt offset by $142 million of cash. The market cap is $2.2 billion, and the company is burning $11 million of cash per year. It is widely expected that Barrick, who is always looking to buy high quality assets, will purchase Novagold’s 50% interest in the world class Donlin mine.”
10. Gold Resource Corporation (NYSE:GORO)
Number of Hedge Fund Holders: 11
Colorado-based gold and silver exploration company Gold Resource Corporation (NYSE:GORO) ranks 10th in our list of the best gold penny stocks to buy now. In July Gold Resource Corporation (NYSE:GORO) posted Q2 results. GAAP EPS in the quarter came in at -$0.05. Revenue in the quarter fell 33.1% year over year to $24.81 million, beating estimates by $3.4 million. Gold Resource Corporation (NYSE:GORO) produced and sold 10,795 ounces of gold and 569,072 ounces of silver
As of the end of the first quarter of 2023, 11 hedge funds tracked by Insider Monkey were long Gold Resource Corporation (NYSE:GORO). The biggest stakeholder of Gold Resource Corporation (NYSE:GORO) during this period was CQS Cayman LP of Michael Hintze which had a $331,777 stake in the company.
9. Perpetua Resources Corp. (NASDAQ:PPTA)
Number of Hedge Fund Holders: 12
Idaho-based Perpetua Resources Corp. (NASDAQ:PPTA) is engaged in the exploration of gold, silver and antimony. Perpetua Resources Corp. (NASDAQ:PPTA) in May disclosed its Q1 results. GAAP EPS in the quarter came in at -$0.07 beating estimates by $0.01. As of the end of March Perpetua Resources Corp. (NASDAQ:PPTA) had cash and cash equivalents totaling approximately $18.6 million.
As of the end of the first quarter of 2023, 12 hedge funds tracked by Insider Monkey were long Perpetua Resources Corp. (NASDAQ:PPTA). The biggest stakeholder of Perpetua Resources Corp. (NASDAQ:PPTA) was billionaire John Paulson’s hedge fund with a $110 million stake.
8. Harmony Gold Mining Company Limited (NYSE:HMY)
Number of Hedge Fund Holders: 13
Harmony Gold Mining Company Limited (NYSE:HMY) ranks 8th in list of the best gold penny stocks to buy now according to hedge funds. Harmony Gold Mining Company Limited (NYSE:HMY) in June said that it was on track to meet guidance for production and costs for FY 2023 ending June 30, and exceed guidance on underground recovered grades. Harmony Gold Mining Company Limited (NYSE:HMY) said this upbeat performance was expected due to its South African assets.
As of the end of the first quarter of 2023, 13 hedge funds tracked by Insider Monkey reported owning stakes in Harmony Gold Mining Company Limited (NYSE:HMY). The biggest stakeholder of Harmony Gold Mining Company Limited (NYSE:HMY) was David Iben’s Kopernik Global Investors which had a $72 million stake in the company.
7. NovaGold Resources Inc. (NYSE:NG)
Number of Hedge Fund Holders: 13
Canada-based NovaGold Resources Inc. (NYSE:NG) ranks 7th in our list of the best gold penny stocks to buy now according to hedge funds. NovaGold Resources Inc. (NYSE:NG) fell to new lows in June after the company posted larger-than-expected loss for Q2.
As of the end of the first quarter of 2023, 13 hedge funds in Insider Monkey’s database of 943 funds reported owning stakes in NovaGold Resources Inc. (NYSE:NG). The biggest stakeholder of NovaGold Resources Inc. (NYSE:NG) was John Paulson’s Paulson & Co. with a $138 million stake in the company
6. IAMGOLD Corporation (NYSE:IAG)
Number of Hedge Fund Holders: 14
Canadian gold mining company IAMGOLD Corporation (NYSE:IAG)’s shares have gained about 80% over the past one year. A total of 14 hedge funds tracked by Insider Monkey had reported owning stakes in IAMGOLD Corporation (NYSE:IAG) as of the end of the first quarter. The biggest stake in IAMGOLD Corporation (NYSE:IAG) was owned by David Iben’s Kopernik Global Investors which had a $50 million stake in the company.
In May IAMGOLD Corporation (NYSE:IAG) said it entered into a five year second lien secured term loan of $400 million from three institutional lenders.
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Disclosure: None. 11 Best Gold Penny Stocks to Buy Now is originally published on Insider Monkey.
