We recently published a list of 12 Most Promising Gold Stocks According to Hedge Funds. In this article, we are going to look at where Agnico Eagle Mines Limited (NYSE:AEM) stands against other most promising gold stocks according to hedge funds.

According to a report by the World Gold Council published on December 13, gold is on track for its strongest annual performance in more than a decade, with prices rising 28% year-to-date through November 2024. This surge has been fueled primarily by robust central bank purchases and heightened investor demand.

Looking towards 2025, the outlook for gold is shaped by a complex interplay of interest rates, economic growth, and global risks. The US Federal Reserve is expected to implement 100 basis points of rate cuts by year-end, and European central banks may follow suit with similar reductions. These actions are likely to provide a supportive environment for gold. However, potential challenges such as trade wars, rising inflationary pressures, and disruptions to supply chains could weigh on the metal’s performance. The Federal Reserve’s actions will play a central role in determining gold’s direction in 2025. Historically, gold has shown strong gains in the initial phases of rate-cutting cycles, averaging a 6% increase during the first six months.

Global economic conditions, particularly in Asia, also play a pivotal role in gold’s demand. China and India, which collectively account for more than 60% of annual gold demand excluding central banks, remain critical to the metal’s long-term prospects. In China, gold demand will hinge on consumer confidence and the broader economic outlook, which may be influenced by government stimulus measures and trade policy developments. India, on the other hand, is already well-positioned with strong economic growth of above 6.5%. Central banks have been net buyers of gold for nearly 15 years, a trend driven by the metal’s role as a long-term store of value and a hedge against geopolitical and financial risks. In 2024, central bank purchases, though slightly below record levels, remained robust, contributing an estimated 7%-10% to gold’s price increase. The report forecasts that central bank demand in 2025 will exceed the long-term average of 500 tonnes, further supporting gold prices. However, a significant slowdown in purchases could introduce downward pressure.

In an interview with CNBC on December 3, Ross Beaty, Chair of Equinox Gold Corporation, discussed the current and future prospects of the gold market. Beaty emphasized that all the bullish factors driving the strong performance of gold in 2024 are still intact, including a strong dollar, inflation outlook, and a favorable gold supply. He is optimistic about gold’s performance in 2025, expecting another excellent year for the precious metal.

However, Beaty noted a puzzling disconnect between the rising gold prices and the flat or declining performance of gold equities. Beaty, who has been involved in the gold sector for nearly 40 years, said that he has never seen something like this and this anomaly will likely correct itself in 2025. He emphasized that there is no reason why the gold price will decline and that it means there will be a great bull market in gold equities in 2025.

Beaty also addressed the potential for further consolidation in the gold mining sector. He highlighted that the mining industry, particularly gold mining, is inherently acquisitive due to the natural decline of mines over time. 2024 saw significant M&A activity in the gold space, and Beaty expects this trend to continue.

Investing in gold has long been considered a reliable strategy for preserving wealth and hedging against economic uncertainties. Beyond physical gold, many investors turn to gold stocks, which offer exposure to the precious metal while benefiting from the potential for growth in mining operations and technological advancements.

Our Methodology

To compile our list of the 12 most promising gold stocks according to hedge funds, we used Finviz and Yahoo stock screeners to find the 30 largest companies that are involved in the production, extraction, processing, or sale of gold. We then used Insider Monkey’s Hedge Fund database to rank 12 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).

Agnico Eagle Mines Limited (NYSE:AEM) 

Number of Hedge Fund Investors: 54

Agnico Eagle Mines Limited (NYSE:AEM) is a leading gold mining company with a strong presence in Canada, Australia, Mexico, and Europe. Founded in 1957, the company operates multiple high-quality mines, including Meadowbank, Meliadine, and Detour Lake in Canada, and is known for its disciplined approach to exploration and capital allocation.

Agnico Eagle Mines Limited (NYSE:AEM) is focusing on growing its resource base and extending the life of its existing mines through extensive exploration programs. The company has launched one of its largest exploration programs ever, with over 100 diamond drill rigs in operation across various sites. Notable exploration successes include the Eastward extension of the East Gouldie Zone at the Odyssey project in Quebec, and the discovery of high-grade mineralization at the Patch 7 zone in the Madrid deposit area at Hope Bay in Nunavut, Canada.

Additionally, the company has successfully extended the life of its Meadowbank and Meliadine mines through continuous operational improvements and exploration. Agnico Eagle Mines Limited (NYSE:AEM) is also advancing the development of the Odyssey mine, which is on track to become the largest underground gold mine in Canada by 2028. These discoveries have the potential to significantly enhance the company’s resource base and support future production growth. On December 6, Agnico Eagle Mines (NYSE:AEM) agreed to acquire O3 Mining at approximately $150.54 million. O3 Mining’s primary asset is its 100% owned Marban Alliance property, located near Val d’Or in the Abitibi region of Quebec, adjacent to Agnico Eagle Mines Limited’s (NYSE:AEM) Canadian Malartic complex.

Agnico Eagle Mines Limited (NYSE:AEM) is also focusing on cost control by maintaining stable operating costs despite rising gold prices, this has contributed to higher margins and strong financial performance. By doing so the company ensures that the benefits of higher gold prices are passed on to shareholders through dividends and share buybacks. Agnico Eagle Mines Limited (NYSE:AEM) is placing a strong emphasis on ESG principles, recognizing that long-term success is intrinsically linked to responsible and sustainable operations. This approach to sustainability ensures that the company can continue to operate in these regions for decades to come.

Overall, AEM ranks 2nd on our list of one of the most promising gold stocks according to hedge funds. While we acknowledge the potential of AEM 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 AEM 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.