In this article, we will take a detailed look at the 12 Best Precious Metals Stocks to Invest in Now. For a quick overview of such stocks, read our article 5 Best Precious Metals Stocks to Invest In Now.
Precious metals are in the spotlight amid rising geopolitical tensions in the Middle East and burgeoning demand for gold in China and India. Gold is surging to new highs despite expectations that the Federal Reserve will have to decrease its target number of rate cuts this year or altogether postpone rate cut plans amid a stubborn inflation and strong jobs market. But precious metals investors are facing a quandary: despite seeing no major inflows in gold ETFs like iShares Gold Trust Micro (IAUM) and SPDR Gold MiniShares Trust (GLDM), gold futures are continuing to fly high. What’s pushing gold prices in 2024? One explanation given by many experts is the possible demand from China, where people are buying gold to protect their investments amid a decline in the real estate industry. A Wall Street Journal report recently quoted Chris Mancini, Associate Portfolio Manager of The Gabelli Gold Fund (GOLDX), who said that the current demand of gold is coming from physical buyers of the precious metal in China.
Precious Metals Outlook in 2024: Bear and Bull Cases
Metals trading company MKS PAMP in its precious metals outlook report for 2024 had already pointed to possible challenges for the Federal Reserve in meeting its inflation goals this year. The report said that the biggest risk was a rebound in inflation which could result in a “higher for longer” scenario. However, given the expectations of rate cuts in the first half of the year, the report gave a rosy outlook for gold and said its average price target for gold as a base case was $2050 per ounce — compare this to the latest gold price of $2340 per ounce as of April 13, and you start to get why analysts are having a hard time understanding gold price jumps this year. The MKS report said that the probability of this scenario was 50%, and said this would realize in case of a “slow landing” where the Fed would start cutting rates in the first half of 2024. But since this scenario is not expected to materialize because of the Fed’s possible change of plans, what’s the bearish case for gold? The MKS report said that if we are in for a higher for longer scenario (seems likely as of now), and gold demand from Asia remains weak (the opposite is true), the average price of gold would be $1600 per ounce.
Germany-based Heraeus also said in its outlook for precious metals earlier this year that interest rates would define the trajectory of precious metals this year, with the firm expecting gold price to remain in between$1,880/oz and $2,250/oz.
Outlook for Silver in 2024
While silver roughly follows the path of gold when it comes to broader price movements on the back of macroeconomic news, the fact that silver is widely used in the industry in addition to being treated as a safe-haven asset makes it an interesting play. For example, the Heraeus report said that silver’s use in solar photovoltaics (PV) is still growing and the firm expects that photovoltaic silver demand could hit ~190 moz this year, driven by China’s solar industry.
A Strong Buying Opportunity for Gold Investors
While gold price jumps this year have puzzled analysts, many believe any correction in the precious metal’s price would create a new buying opportunity for investors since geopolitical tensions in the Middle East, Russia-Ukraine war and the upcoming elections in the US will act as catalysts. A latest Bloomberg report quoted Philip Newman, managing director at consultancy Metals Focus, who said that the gold market has become “overextended” that could lead to “liquidation selling.” However, the analyst said these liquidations could create a “very strong buying opportunity.”
Photo by Gold-bar-jingming-pan on Unsplash
Performance of Precious Metals Stocks
While SPDR Gold Trust (NYSEARCA:GLD) is up about 13% so far this year, what does the performance of precious metals-focused ETFs look like? iShares MSCI Global Gold Miners ETF (NASDAQ:RING) is up 11% this year, compared to the S&P 500’s gain of about 8%. Over the past one year, RING is down 2%, compared to the broader market’s gains of 23%. Some of the top holdings of the ETF include Newmont Corporation (NYSE:NEM), Barrick Gold Corp (NYSE:GOLD) and Agnico Eagle Mines Ltd (Ontario) (NYSE:AEM).
For this article we scanned Insider Monkey’s database of 933 hedge funds and their stock holdings and chose 12 precious metals stocks with the highest number of hedge fund investors. Why do we pay attention to hedge fund sentiment? Hedge funds’ top 10 consensus stock picks outperformed the S&P 500 Index by more than 140 percentage points over the last 10 years (see the details here).
12. AngloGold Ashanti (NYSE:AU)
As of the end of the fourth quarter of 2023, 13 hedge funds out of the 933 funds tracked by Insider Monkey had stakes in South Africa-headquartered gold mining company AngloGold Ashanti.
11. Gold Fields Limited (NYSE:GFI)
Number of Hedge Fund Investors: 19
Headquartered in South Africa, Gold Fields Limited (NYSE:GFI) is one of the biggest gold mining companies in the world. The stock has gained about 22% over the past one year.
As of the end of the fourth quarter of 2023, 19 hedge funds out of the 933 funds tracked by Insider Monkey reported owning stakes in Gold Fields Limited (NYSE:GFI).
10. Sibanye Stillwater Ltd (NYSE:SBSW)
Number of Hedge Fund Investors: 21
Insider Monkey’s database of 933 hedge funds shows that 21 hedge funds were long Sibanye Stillwater Ltd (NYSE:SBSW) as of the end of the fourth quarter of 2023. The biggest stake in Sibanye Stillwater Ltd (NYSE:SBSW) is owned by Cliff Asness’s AQR Capital Management which owns a $34.3 million stake in Sibanye Stillwater Ltd (NYSE:SBSW).
Sibanye Stillwater Ltd (NYSE:SBSW) recently said a planned restructuring of its gold mining operations in South Africa would result in job losses of 3,000 employees and 1,000 contractors.
9. Pan American Silver Corp (NYSE:PAAS)
Number of Hedge Fund Investors: 22
Pan American Silver Corp (NYSE:PAAS) shares have gained about 23% so far this year. Roth MKM recently published a list of its top-ranked silver mining stocks. Pan American Silver Corp (NYSE:PAAS) was one of them. Roth MKM thinks silver stocks can catch up and outperform gold stocks if silver prices rebound.
8. Royal Gold Inc (NASDAQ:RGLD)
Number of Hedge Fund Investors: 23
With over two decades of consistent dividend increases, Royal Gold Inc (NASDAQ:RGLD) is one of the best precious metals stocks to buy according to hedge funds. A total of 23 hedge funds in Insider Monkey’s database reported owning stakes in Royal Gold Inc (NASDAQ:RGLD) as of the end of last year. The biggest stakeholder in Royal Gold Inc (NASDAQ:RGLD), with a $444 million stake, was First Eagle Investment Management of Jean-Marie Eveillard.
The company in its Q4 earnings call talked about guidance and some other important business insights:
“Centerra also provided 2024 production guidance of 180,000 to 200,000 ounces of gold and 55 million to 65 million pounds of copper. Centerra expects this production to be evenly weighted throughout the year. At Pueblo Viejo, reported yesterday that construction and commissioning of the plant expansion was substantially complete at the end of December, and they have resolved the equipment issues they were dealing with in the second half of the year. They are working on rebuilding the crush or stockpile feed conveyor and are targeting completion of this work in the second quarter, which is required for the plant to reach full throughput. Our stream is based on Barrick’s share of production at PV, and Barrick is guiding to gold production of 420,000 to 490,000 ounces in 2024.
Approximately 165,000 ounces of silver were deferred during the quarter, and the total deferred amount was 854,000 ounces at the end of December. In yesterday’s report, Barrick commented that the focus for the first quarter will be the continued stability and optimization of the flotation circuit, which we expect should result in higher and more consistent silver recovery. This optimization work will likely take some time, and the recovery of our deferred silver ounces will depend on the outcome of this work. At Cortez, Barrick announced in mid-December that the record of decision was received for Goldrush, and they expect to ramp up production from 130,000 ounces this year to about 400,000 ounces per year in 2028. They also announced 2024 guidance for Cortez yesterday of 620,000 to 680,000 ounces, which includes the contribution from Goldrush.”
Read the full earnings call transcript here.
Like RGLD, hedge funds are also piling into Newmont Corporation (NYSE:NEM), Barrick Gold Corp (NYSE:GOLD) and Agnico Eagle Mines Ltd (Ontario) (NYSE:AEM).
7. Wheaton Precious Metals Corp (NYSE:WPM)
Number of Hedge Fund Investors: 28
Canadian-based Wheaton Precious Metals Corp (NYSE:WPM) is one of the top precious metals stocks to invest in 2024. Roth MKM recently added Wheaton Precious Metals Corp (NYSE:WPM) in its list of top-ranked silver stocks. Wheaton Precious Metals Corp (NYSE:WPM) recently increased its dividend by 3.3%.
6. Franco-Nevada Corp (NYSE:FNV)
Number of Hedge Fund Investors: 30
Of the 933 hedge funds in Insider Monkey’s database, 30 funds had stakes in Canadian-based gold-focused royalty and streaming company Franco-Nevada Corp (NYSE:FNV). The biggest stake in Franco-Nevada Corp (NYSE:FNV) belongs to Jean-Marie Eveillard’s First Eagle Investment Management which owns a $349 million stake in Franco-Nevada Corp (NYSE:FNV).
In addition to FNV, hedge funds are also buying Newmont Corporation (NYSE:NEM), Barrick Gold Corp (NYSE:GOLD) and Agnico Eagle Mines Ltd (Ontario) (NYSE:AEM).
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Disclosure. None. 12 Best Precious Metals Stocks to Invest in Now was initially published on Insider Monkey.