In this piece, we will take a look at the ten best gold royalty and small-cap gold stocks to buy. If you want to skip our overview of the gold industry, the latest news, and some top firms, then you can take a look at the 5 Best Gold Royalty and Small-Cap Gold Stocks to Buy.
The close of 2023 saw gold start to rise again as central banks continued to build their inventories and macro players started to become more comfortable with entertaining the notion of the Federal Reserve finally cutting interest rates. The current investment and monetary policy climate means that gold as a whole does not do well, and the dynamics of its price throughout 2023 would have been unclearer had central bank purchases not grown.
As interest rates around the world are high, investors prefer to keep their money in interest bearing securities, accounts, or other investment vehicles. Should they believe that the long term profits offered by accumulating and compounding interest are lower than the price appreciation in gold, then money starts to flow to the shiny metal. This was why gold prices jumped to a record high during the tail end of 2023, as we outlined in 13 Most Promising Gold Stocks According to Analysts - a piece that covered gold stocks with the highest analyst average share price upside.
Of course, gaining exposure to gold doesn't always mean that one has to buy the actual bricks and store them. An investment can be grown in multiple ways through the course of time. For instance, property enables long term value appreciation and stocks provide the change for multi digit percentage returns in just months if the cards are played right. Similarly, dividend stocks offer the best of both worlds (check out 12 Best February Dividend Stocks To Buy) as they not only allow an investor to have a stable income, but also the chance to reinvest this income in the shares to also dabble with capital appreciation. The latter strategy is quite favored by our time's most successful investor, Warren Buffett of Berkshire Hathaway as we explain in Warren Buffett’s 12 Longest Held Stocks.
One strategy that provides the potential to avail all these investment benefits is by investing in dividend paying gold stocks. Since gold stocks appreciate when gold prices rise, and dividend paying gold stocks also provide the potential for regular payouts, these stocks often see some notable hedge fund investor interest as well. For instance, our coverage of 12 Best Gold Stocks With Dividends revealed that the top three gold stocks, namely Newmont Corporation (NYSE:NEM), Agnico Eagle Mines Ltd (NYSE:AEM), and Barrick Gold Corp (NYSE:GOLD) saw interest from heavy hedge fund hitters such as Israel Englander's Millennium Management, Ken Griffin's Citadel Investment Group, and Jean-Marie Eveillard's First Eagle Investment Management.
The next question to ask is what might be in stock for the gold industry and gold prices in 2024. January 2024 has set the pace. for the rest of the year, and right now, investors have had to contend themselves with a resilient Fed that is laser focused on bringing down inflation. Fed Chair Jerome Powell clearly stated in his latest post monetary policy announcement press conference that his organization will only start cutting interest rates once it is confident that inflation will stay at the long term goal. of 2%. The stock market's initial reaction to this was in the red, and for gold stocks, the Philadelphia Gold and Silver Index is down 8% year to date and 14% over the past year.
When we talk about gold stocks, they can mean different firms. One of the most commonly understood definitions of a gold stock is of a firm that mines and sells gold. However, gold stocks also cover royalty companies that follow a much less capitally intensive business model by holding rights to the land that becomes the site of a gold mine. These firms, also called gold streaming companies, have a higher net asset value, and some scenarios that see investors flock to them include times during high gold prices but weak production expansion in the gold mining sector.
The broader dynamics of the gold streaming industry see royalty companies balance their business operations between investing in politically stable jurisdictions, sites that can produce gold for years, and reliable mining partners capable of handling any untoward events. This was also evident during Royal Gold, Inc. (NASDAQ:RGLD)'s third quarter of 2023 earnings call where management shared:
Finally, I want to comment briefly on the metal and jurisdictional mix of our portfolio both of which are important differentiators for Royal Gold. Gold has remained strong this year with strong central bank demand and has performed well despite steady increases in interest rates. As Paul highlighted 78% of our revenue came from gold this quarter which is the highest among our large cap peers. And jurisdictionally the two most significant revenue sources for this quarter were Canada and the US, which combined provided about 53% of our revenue. We seek to acquire precious metal assets in safe jurisdictions operated by high-quality counterparties and we believe the transactions we’ve completed over the past couple of years will continue to enhance our shareholders’ exposure to gold revenue in low-risk jurisdictions.
With these details in mind, let's take a look at some best gold royalty and small cap gold stocks to buy with the notable picks being Wheaton Precious Metals Corp. (NYSE:WPM), Royal Gold, Inc. (NASDAQ:RGLD), and Franco-Nevada Corporation (NYSE:FNV).
10 Best Gold Royalty and Small-Cap Gold Stocks to Buy
A close-up of a hand placing a block of gold into a safe.
Our Methodology
To make our list of the best gold royalty and best small cap gold stocks to buy, we ranked all small cap gold companies and all gold royalty/streaming companies by the number of hedge funds that had bought their shares during Q3 2023. Out of these 23 stocks, the gold royalty and small cap gold stocks with the highest number of hedge fund investors were picked.
For these best gold royalty and best small cap gold stocks, we have also mentioned hedge fund sentiment. Hedge funds’ top 10 consensus stock picks outperformed the S&P 500 Index by more than 140 percentage points over the last 10 years (see the details here). That’s why we pay very close attention to this often-ignored indicator.
10 Best Gold Royalty and Small-Cap Gold Stocks to Buy
New Gold Inc. (NYSE:NGD) is a Canadian gold royalty stock with streaming interests in Canada and Mexico. It started 2024 on a strong note in January when it revealed that 2023 gold output had met the higher end of guidance. The shares are up by 12% over the past year, and the stock appreciated by 5% during trading on the first day of February.
By the end of 2023's third quarter, 13 out of the 910 hedge funds surveyed by Insider Monkey had bought New Gold Inc. (NYSE:NGD)'s shares. Jim Simons' Renaissance Technologies was the biggest shareholder as it held a $14.1 million stake.
Royal Gold, Inc. (NASDAQ:RGLD), Wheaton Precious Metals Corp. (NYSE:WPM), and Franco-Nevada Corporation (NYSE:FNV) are met by New Gold Inc. (NYSE:NGD) in our list of the best small cap gold and gold streaming stocks.
Equinox Gold Corp. (NYSE:EQX) holds interests in gold and silver mines all over North and South America. Its fourth quarter of 2023 gold production was the highest quarterly production for the year, and it allowed Equinox Gold Corp. (NYSE:EQX) to meet the midpoint of its 2023 gold production guidance.
As of September 2023 end, 13 out of the 910 hedge funds profiled by Insider Monkey had held a stake in Equinox Gold Corp. (NYSE:EQX).
IAMGOLD Corporation (NYSE:IAG) is a small cap gold company headquartered in Canada and with a presence in Africa as well. The shares are rated Buy on average and analysts have set an average share price target of $3.15.
During last year's September quarter, 14 out of the 910 hedge funds tracked by Insider Monkey owned IAMGOLD Corporation (NYSE:IAG)'s shares. The firm's largest investor in our database is David Iben's Kopernik Global Investors as it owns $38.4 million worth of shares.
SSR Mining Inc. (NASDAQ:SSRM) is a diversified American gold mining company with exposure to mining properties in Turkiye, the U.S. Canada, and Argentina. It joined other companies in announcing strong gold production for the fourth quarter that allowed it to meet 2023 estimates.
After digging through 910 hedge fund holdings for 2023's third quarter, Insider Monkey found that 14 were SSR Mining Inc. (NASDAQ:SSRM)'s shareholders.
NovaGold Resources Inc. (NYSE:NG) is a Canadian company with hundreds of mining interests in a ~30,000 hectare gold project in Alaska. It became one of the first gold streaming stocks to report its Q4 2023 earnings in January. The results saw NovaGold Resources Inc. (NYSE:NG) declare $126 million in cash and equivalents to develop the Donlin gold site in Alaska.
15 out of the 910 hedge funds part of Insider Monkey's Q3 2023 research had invested in the firm. NovaGold Resources Inc. (NYSE:NG)'s largest stakeholder among these is John Paulson's Paulson & Co since it holds 22 million shares that are worth $85.3 million.
Wheaton Precious Metals Corp. (NYSE:WPM), NovaGold Resources Inc. (NYSE:NG), Royal Gold, Inc. (NASDAQ:RGLD), and Franco-Nevada Corporation (NYSE:FNV) are some top gold royalty and small cap cold stocks.
