We recently published a list of 10 Best Gold Royalty and Small-Cap Gold Stocks to Buy. In this article, we are going to look at where Sandstorm Gold Ltd. (NYSE:SAND) stands against other best gold royalty and small-cap gold stocks to buy.
The U.S. Federal Reserve now anticipates just two interest rate cuts next year, a reduction from the four previously forecasted in September, due to inflation concerns and the potential economic impact of President-elect Donald Trump’s proposed trade tariffs. On November 18, in the immediate aftermath of the Fed’s announcement, the U.S. dollar surged, with the dollar index reaching a two-year high. This rally placed downward pressure on gold prices, which fell 2% to their lowest levels in a month. Traditionally, a stronger dollar and higher U.S. Treasury yields make gold less attractive as an investment. However, analysts suggest that these traditional relationships between gold, the dollar, and interest rates have become less predictable in recent years.
In an interview with CNBC on December 18, Thomas Rupf, Chief Investment Officer and Head of Trading at VP Bank Asia provided detailed insights into the current market conditions and future projections for the U.S. dollar and gold. Rupf acknowledged the resilience of the U.S. dollar and attributed it to the perception of the continued strength of the U.S. economy. However, he also pointed out that the U.S. dollar is currently overvalued and expects the US economy to slow down, which could contribute to a weaker US dollar by the end of next year.
Regarding gold, Rupf is optimistic and noted that the potential slowdown in the US economy and dollar as well as the ongoing trend of de-dollarization are all bullish factors for gold prices. He mentioned that ETF flows, which are still 20% below historical levels, indicate that there is significant room for retail investors to increase their investment in gold ETFs. Rupf concluded by agreeing that gold prices could realistically reach $2,800 to $2,900. He also mentioned the possibility of gold reaching up to $3,000, which he considers the top end of his forecast.
Gold has historically been recognized as a reliable investment, known for its enduring value and resilience against economic uncertainties. This precious metal has been a cornerstone in many diversified investment portfolios, offering a sense of security and stability in times of financial turmoil.
Our Methodology
To compile our list of the 10 best gold royalty and small-cap gold stocks to buy, we used Finviz and Yahoo stock screeners to find the companies that are involved in the production, extraction, processing, financing, or sale of gold and have a market capitalization between $200 million and $10 billion as of December 23. Then we used Insider Monkey’s Hedge Fund database to rank 10 stocks according to the largest number of hedge fund holders, as of Q3 2024. The list is sorted in ascending order of hedge fund sentiment.
Why do we care about what hedge funds do? 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).
Sandstorm Gold Ltd. (NYSE:SAND)
Number of Hedge Fund Investors: 18
Market Capitalization as of December 23: $1.60 Billion
Sandstorm Gold Ltd. (NYSE:SAND) is a Canadian gold royalty and streaming company headquartered in Vancouver. The company focuses on acquiring royalties and metal purchase agreements from advanced-stage mining companies worldwide. Through its business model, Sandstorm Gold Ltd. (NYSE:SAND) provides upfront payments to mining companies in exchange for a percentage of their future production or revenue. As of September 2024, the company holds a diverse portfolio of 243 royalties and streams, including 41 producing mines.
Sandstorm Gold Ltd. (NYSE:SAND) places a strong emphasis on key development assets such as the Greenstone Gold Mine, Platreef, Hod Maden, and the Robertson Deposit at the Cortez Complex. Operated by Equinox, the Greenstone Gold Mine has an average throughput of 20,000 tons per day, which represents 76% of its designed capacity. As Greenstone continues to ramp up production, it is anticipated to significantly enhance Sandstorm Gold Ltd.’s (NYSE:SAND) gold equivalent production. Similarly, Platreef, a project under development by Ivanhoe Mines, is set to become one of the world’s largest and lowest-cost producers of platinum group metals (PGMs) and gold. Once Phase 2 of Platreef becomes operational, it is expected to contribute approximately 10,000 ounces of gold annually to Sandstorm Gold Ltd. (NYSE:SAND), with the potential to increase to 15,000–20,000 ounces annually during Phase 3.
Sandstorm Gold Ltd. (NYSE:SAND) maintains a disciplined approach to capital allocation, prioritizing debt repayment and selective share repurchases. During Q3, the company repaid $9 million in debt, with this momentum increasing in Q4 as an additional $10 million was repaid in the first five weeks. As of November 8, the company’s debt has been reduced to $369 million, with further reductions expected. By lowering its debt levels, Sandstorm Gold Ltd. (NYSE:SAND) aims to strengthen its balance sheet and enhance its financial flexibility.
Overall, SAND ranks 3rd on our list of best gold royalty and small-cap gold stocks to buy. While we acknowledge the potential of SAND to grow, our conviction lies in the belief that 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 SAND but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.
READ NEXT: 8 Best Wide Moat Stocks to Buy Now and 30 Most Important AI Stocks According to BlackRock.
Disclosure: None. This article is originally published at Insider Monkey.
