We recently published a list of 10 Best Silver Mining Stocks to Buy Right Now. In this article, we are going to take a look at where Royal Gold, Inc. (NASDAQ:RGLD) stands against other best silver mining stocks to buy right now.
Silver’s price saw significant appreciation in 2024, with the precious metal up by over 25% on a YTD basis. Market experts believe that the price appreciation stemmed from its expected high industrial demand, primarily from EV manufacturers. Furthermore, they believe that volatility in the dollar index and heightened geopolitical tensions hinted at a robust appetite for precious metals. Silver has now found its applicability in solar panels for renewable energy, in advanced healthcare, in electronics, and several other technologies. This wide adoption provided support to the precious metal in 2024.
Silver Institute mentioned that silver demand for solar power more than doubled over the previous five years, increasing from 74.9 million ounces in 2019 to an expected 232 million ounces by this year’s end.
Where Is Silver Headed?
Geopolitical concerns, including wars in Ukraine and the Middle East, together with China’s latest measures to fuel its economic recovery, supported much of the silver price rally in the recent past. As per industry experts, expectations of strong demand from the renewable energy sector and electronics should be able to offset the uncertainties surrounding economic and monetary policies in the near future.
Apart from its use as an investment, the precious metal has applications in industrial and medical industries, unlike gold. As per Techopedia, only 10% of gold output is used in industrial use, while more than 50% of silver production is used in industrial applications. As per Silver Institute, record industrial demand and recovery in jewelry and silverware are expected to lift demand to 121 billion ounces in 2024, while mine supply is expected to increase by just 1%. Notably, the exchange-traded products remain on track for their first annual inflows in 3 years. This is because silver’s investment appeal has increased off the back of rate-cut expectations, periods of dollar weakness, and falling yields.
The Silver Institute also highlighted that industrial demand should increase by 7% in 2024 to outpace 700Moz for the first time on record.
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Expectations of Increased Silver Production
The Silver Institute highlighted that, in 2024, global mined silver production is expected to rise by 1% YoY to 837Moz. This is expected to be supported by growth from Mexico, Chile, and the US, which should outpace lower output from Peru, Argentina, and China. The production from Mexico is expected to rise by 10Moz, which equates to 5% YoY, to 209Moz. This should stem from increased mill throughput and grade at Pan American Silver’s La Colorada operation, following the upgraded ventilation infrastructure. Also, the output is expected to be fueled by a recovery in production from Newmont’s Peñasquito mine.
In the release dated 12th November, The Silver Institute also mentioned that recycling in 2024 is projected to grow 5% to a 12-year high. This rise should come from price-sensitive sectors, like a spike in Western Silverware scrap. While industrial recycling also edges higher, the growth here is mainly associated with structural factors.
Our Methodology
To list the 10 Best Silver Mining Stocks to Buy Right Now, we used a screener and sifted through several online rankings. After extracting the list of silver mining stocks, we mentioned their upside potential, as of November 18. Finally, the stocks were ranked in ascending order of their hedge fund sentiments, as of Q3 2024.
At Insider Monkey we are obsessed with 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 mine entrance, showcasing the precious metals and minerals that this company produces.
Royal Gold, Inc. (NASDAQ:RGLD)
Average Upside Potential: 20.0%
Number of Hedge Fund Holders: 30
Royal Gold, Inc. (NASDAQ:RGLD) acquires and manages precious metal streams, royalties, and related interests. The company, through its wholly-owned subsidiary RGLD Gold AG, holds a life of mine purchase and sale agreement for 100% of the silver produced from Zone 5 at Khoemacau.
Khoemacau is a copper-silver mine which is located in the Kalahari copper belt in northwestern Botswana in the Kalahari Desert and is operated by a subsidiary of MMG Limited. MMG aims to expand the total production capacity at Khoemacau to 130,000 tonnes of copper in concentrate per year by building a new 4.5 million tonne per year process plant, increasing Zone 5 output, and developing additional deposits. It expects to start the expansion feasibility study by 2024 end, start construction in 2026, produce the first concentrate in 2028, and reach full capacity by 2029. Notably, any expanded production from the Zone 5 and Mango NE deposits falls in the area of interest covered by Royal Gold’s silver stream.
Royal Gold, Inc. (NASDAQ:RGLD) added that the Khoemacau stream fits into the production profile and is expected to add another component of growth.
In Q3 2024, Royal Gold, Inc. (NASDAQ:RGLD) recognized record total revenue of $193.8 million, comprising stream revenue of $133.1 million and royalty revenue of $60.8 million at an average gold price of $2,474 per ounce, an average silver price of $29.43 per ounce and an average copper price of $4.18 per pound. The growth in total revenue was mainly because of higher average gold, silver, and copper prices compared to the prior period. Given the positive outlook on silver demand, analysts believe that increased silver prices might support the company’s revenue.
Raymond James increased its price objective on the shares of Royal Gold, Inc. (NASDAQ:RGLD) from $184.00 to $186.00, giving an “Outperform” rating on 11th November.
Overall, RGLD ranks 1st on our list of best silver mining stocks to buy right now. While we acknowledge the potential of RGLD as an investment, our conviction lies in the belief that some deeply undervalued AI stocks hold greater promise for delivering higher returns and doing so within a shorter time frame. If you are looking for a deeply undervalued AI stock that is more promising than RGLD 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.
