We recently published a list of 10 Best Gold Stocks Under $30. In this article, we are going to take a look at where AngloGold Ashanti plc (NYSE:AU) stands against other best gold stocks under $30.
Gold mining is a global industry that operates on every continent except Antarctica, and gold is produced from mines of vastly varied forms and scales.
Gold has traditionally been used as a hedge against inflation and unstable economies. As per Joseph Cavatoni, senior market strategist of the World Gold Council, “Gold does well in moments of risk. If you look at market drawdowns or systemic events in the market, that’s when gold really shines.” Cavatoni suggested new investors choose between investments like gold-backed ETFs and real gold, which requires concerns like purity and storage. While real gold requires close attention to pricing and liquidity, exchange-traded funds (ETFs) provide accessibility and are frequently commission-free.
Gold prices have risen by more than 30% in October 2024, reaching a record-breaking high, boosted by the Federal Reserve’s recent half-point rate drop, geopolitical tensions, and economic uncertainties surrounding the US presidential election. China, India, and Turkey’s central banks have supported the price rise by lowering their reliance on the US currency, while the renowned retail giant Costco’s launch of 1-ounce gold bars has raised gold’s accessibility for individual investors.
According to David Meger, director of metals trading at High Ridge Futures, the heightened tensions between Russia and Ukraine are likely the most significant geopolitical factor influencing the gold market during the past several days.
Investors have witnessed financial gains as the global gold mining industry of the broader market has grown by 18.29% since the beginning of the year and by 31.29% in the past year. Meanwhile, the World Gold Council reports that record prices and strong investment flows helped drive a 5% year-over-year (y/y) growth in gold demand to 1,313 tonnes (t) in Q3 2024. The average LBMA gold price increased 28% yearly to a record $2,474 per ounce.
For the seventh straight quarter, OTC investment nearly quadrupled to 137 tonnes. Demand for technology-related gold increased 7% year over year to 83 tonnes, propelled by AI breakthroughs. While recycled gold volumes rose 11% year over year, mine production jumped 6% year over year to a record 990 tonnes, and no widespread distress selling was seen.
Demand was significantly increased by the recovery in ETF inflows, which reached 95 tonnes. Key drivers included portfolio diversification, geopolitical uncertainties, and declining interest rates. Despite a 9% year-over-year reduction brought on by market-specific variables, bar and coin investment stayed strong at 269 tonnes.
The projection for 2024, as per the World Gold Council, calls for healthy professional flows and consistent bar and coin investment to offset slowing central bank buying and declining consumer demand.
On the other hand, as per Bloomberg, on November 21, 2024, Samantha Dart, co-head of Global Commodities Research at Goldman Sachs, stated central bank purchases are raising the price of gold. She forecasts that the price of gold will reach $3,000 per ounce by the end of 2025.
Our Methodology
For this article, we first used a Finviz stock screener to list down all the gold stocks trading under $30 (as of the writing of this article) with over 40% institutional ownership. From the resultant dataset, we chose the 10 best gold stocks with the highest upside potential. The stocks are ranked in ascending order of their upside potential as of November 18.
Why are we interested in the stocks that hedge funds pile into? The reason is simple: our research has shown that we can outperform the market by imitating the top stock picks of the best hedge funds. Our quarterly newsletter’s strategy selects 14 small-cap and large-cap stocks every quarter and has returned 275% since May 2014, beating its benchmark by 150 percentage points. (see more details here)
A group of miners in hard hats and safety gear descending into a deep coal mine.
AngloGold Ashanti plc (NYSE:AU)
Upside potential as of November 18: 35.52%
Share Price as of November 18: $24.82
AngloGold Ashanti plc (NYSE:AU) is one of the gold miners. As by-products, the firm also makes sulfuric acid and silver. It has three operating divisions: Africa, Australia, and the Americas. The company’s operations at the Kibali, Iduapriem, Obuasi, Siguiri, and Geita mines in Africa provide for the majority of its revenue. AU is up by over 38% since the start of 2024, which places it on our list of the best gold stocks.
AngloGold Ashanti plc (NYSE:AU) had a strong third quarter in 2024, with its managed operations producing the largest quantity of gold in 2024 and a noteworthy 339% rise in adjusted EBITDA over the prior year. Revenue increased 31% year over year, mostly as a result of increased production from managed operations, efficient cost control, and higher gold prices, which rose 28% year over year to $2,449/oz. About 1.56% more gold was produced by managed operations YoY.
In Q3 2024, AngloGold Ashanti plc (NYSE:AU)’s free cash flow increased 17-fold as the average gold price rose. The Sukari mine, which was recently approved for AngloGold Ashanti plc (NYSE:AU) acquisition, will expand its portfolio and offer additional financial and operational benefits.
JPMorgan raised its price target for AngloGold Ashanti plc (NYSE:AU) from $32 to $37 on October 10, 2024. The company stated that industrial metal prices, which rose by 10% over the past two weeks, “have been quick to react” to China’s economic policy initiatives. The analyst suggested lowering exposure at these levels, claiming that metals do not appear to assign significant risk incentives to trade-related outcomes, particularly higher tariffs.
Overall, AU ranks 5th on our list of best gold stocks under $30. While we acknowledge the potential of AU, our conviction lies in the belief that some AI stocks hold greater promise for delivering higher returns, and doing so within a shorter time frame. If you are looking for an AI stock that is more promising than AU but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.
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Disclosure: None. This article is originally published at Insider Monkey.