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 Royal Gold, Inc. (NASDAQ:RGLD) 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.
A closeup image of a miner holding a pile of gold nuggets, a representation of the company’s royalty.
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).
Royal Gold, Inc. (NASDAQ:RGLD)
Number of Hedge Fund Investors: 30
Royal Gold, Inc. (NASDAQ:RGLD) is a leading precious metals royalty and streaming company, with a diverse portfolio of high-quality assets across North America, South America, and other key mining regions. The company was founded in 1981 and is headquartered in Denver, Colorado.
Royal Gold, Inc. (NASDAQ:RGLD) is actively pursuing new opportunities to expand its portfolio. The rising gold price environment has brought forward a number of attractive projects, and the company is well-positioned to capitalize on these opportunities due to its strong balance sheet and liquidity. As of September 30, Royal Gold, Inc. (NASDAQ:RGLD) is debt-free and has a $1 billion revolving credit facility combined with approximately $160 million of working capital, which makes up approximately $1.16 billion in available liquidity. This financial strength allows the company to be highly competitive in the market for new royalty and streaming agreements, particularly in safe jurisdictions and with quality counterparties.
Royal Gold, Inc. (NASDAQ:RGLD) is also focused on several key strategies to drive continued growth and value creation. One of the primary areas of focus is the organic expansion of its existing portfolio. The company is working closely with operators such as Newmont at Penasquito and Kinross at Great Bear to optimize production and extend mine life. These initiatives are expected to contribute significantly to the company’s revenue and cash flow in the coming years.
Overall, RGLD ranks 7th on our list of one of the most promising gold stocks according to hedge funds. While we acknowledge the potential of RGLD 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 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.
