In this piece, we will take a look at the 11 best precious metals stocks to buy. If you want to skip our analysis of the precious metals industry and how gold is particularly relevant to the economy today, head on over to 5 Best Precious Metals Stocks to Buy.
All that glitters is not gold. But, despite today's day and age where cryptocurrencies reign supreme, gold is still one of the more popular commodities for investors, as a reserve for central banks, and as a material for people who like items of adornment such as jewelry.
Consequently, the precious metals market is one of the more lucrative industries in the world. And the industry itself is coming off of the high that it experienced last year. Global gold demand jumped to 4,741 tonnes last year, marking a stunning 18% annual gain in a tough macroeconomic environment that was dominated by the strong U.S. dollar due to the Federal Reserve's rapid interest rate hikes. The strong dollar and high interest rates led to turmoil in the treasury market since older securities were issued with lower rates. As central banks realized the peril of relying too much on government securities for their reserves, they chose to turn to gold as an alternative. During the same time period, as the demand for gold peaked, so did its price, which touched $1,800 per ounce on average in 2022.
Then, in 2023, gold prices started to soar even higher as inflationary pressures started to reduce in America. It jumped to $1,836 by later March as investors became wary of a weakening dollar due to the Federal Reserve taking its foot off of the interest rate pedal. By April, the price seemed to have no end in sight, soaring further to $1,980 per ounce and bringing back the shine to the metal. This wasn't the highest level that it would touch during the month, with a peak price of $2,055 per ounce as the second week of April ended.
But how is gold doing these days? After all, June has been a month of significant softening in the U.S. labor market and a tilt towards dovishness from the Federal Reserve - both factors that we would wager would be bullish for gold prices. Well currently, gold is trading at roughly $1,914 per ounce - maintaining a bullish trend that started in October 2022. However, from the start of this month, the price has been dropping. Gold was trading at roughly $1,980 per ounce at the start of June, so it appears that the market has other things on its mind apart from the Fed and the American economy.
The recent dip in gold might be due to the Bank of England, which finally (and reluctantly) opened the flood gates of hawkishness in June as it hiked interest rates by fifty basis points. Analysts believe that this might have caused bullion to drop, while others believe that the root of the turmoil is still the Fed as Chair Powell reiterated to the U.S. Senate that his bank will further increase interest rates later this year. (On a side note, if you're interested in understanding the mechanics of gold price, checking out Gold’s Price Decline Below $2,000 and its Implications might be worth your while). Some companies that have their fortunes tied to gold are Barrick Gold Corporation (NYSE:GOLD), Newmont Corporation (NYSE:NEM), and Kinross Gold Corporation (NYSE:KGC).
However, gold is not the only precious metal in the world. One metal that sees its price closely followed by analysts along with gold is silver. Some top silver mining companies in the world are Wheaton Precious Metals Corp. (NYSE:WPM), and Hecla Mining Company (NYSE:HL). And alongside gold, silver is booming as well. Data from The Silver Institute shows that global silver demand posted a record high in 2022 when it peaked at a whopping 1.24 billion ounces. This growth, surprisingly, was fueled primarily by silverware, whose demand jumped by a surprising 80% to sit at 73.5 Moz. In second place for growth, demand for silver jewelry jumped by 29% to sit at 234 million ounces. However, the biggest user of silver was the industrial segment of the global silver market. Demand from this segment grew by 18% to sit at 556 million ounces, with the requirements of photovoltaic and 5G applications among others sitting at the heart of the growth.
With the first half of 2023 nearly coming to an end, let's take a look at what's happening in the precious metals industry right now. On this front, here's what the management of Kinross Gold was experiencing during the first quarter of 2023:
We saw a strong performance from our operations in Q1 with all of our mines achieving planned production. Approximately one-third of our production came from the U.S., whereas anticipated costs were elevated. The mines are achieving their targets and we expect cost to come down in the next couple of years as temperature decrease and grades improve. In addition, we are successfully executing on projects at Fort Knox and Round Mountain, which we expect to provide higher grade higher margin production in the future, helping drive down the costs in the U.S. Our assets outside the U.S. accounted for approximately two-thirds of production and delivered strong cash flow for the company with an average cost and $800 an ounce.
With these details in mind, let's take a look at some of the best precious metal stocks that are finding favor with hedge funds. Out of these, some top picks are Agnico Eagle Mines Limited (NYSE:AEM), Newmont Corporation (NYSE:NEM), and Barrick Gold Corporation (NYSE:GOLD).
Our Methodology
To compile our list of the best precious metals stocks, we first compiled the biggest gold, silver, and other precious metal companies by their market capitalization for an initial list of 41 companies. Then, the number of hedge funds that had invested in them during 2023's March quarter was determined and the top precious metal stocks 'sifted' out of these are as follows.
Sibanye Stillwater Limited (NYSE:SBSW) is a diversified precious mining company headquartered in South Africa. The firm mines gold, silver, palladium, and other metals. It has facilities in the U.S., Zimbabwe, South Africa, Canada, and other countries.
By the end of Q1 2023, 18 of the 943 hedge funds polled by Insider Monkey had bought a stake in Sibanye Stillwater Limited (NYSE:SBSW). Out of these, the firm's largest investor is Ryan Schedler and Bradley Shisler's Condire Investors since it owns 3.7 million shares that are worth $31 million.
Along with Newmont Corporation (NYSE:NEM), Agnico Eagle Mines Limited (NYSE:AEM), and Barrick Gold Corporation (NYSE:GOLD), Sibanye Stillwater Limited (NYSE:SBSW) is a hot precious metals stock.
Pan American Silver Corp. (NYSE:PAAS) is a mine management firm headquartered in Vancouver, Canada. It operates gold, silver, and other mines in several countries such as Argentina, Mexico, Canada, and Peru.
After looking at 943 hedge funds for their first quarter of 2023 shareholdings, Insider Monkey discovered that 19 had invested in the firm. Pan American Silver Corp. (NYSE:PAAS)'s largest hedge fund shareholder is David Greenspan's Slate Path Capital with a $70 million stake.
B2Gold Corp. (NYSE:BTG) is a pureplay gold mining company. The firm has three mines in Africa and Asia. Additionally, it also owns interests in other companies, as well as exploration projects in Europe.
20 of the 943 hedge funds part of Insider Monkey's database had bought B2Gold Corp. (NYSE:BTG)'s shares as of Q1 2023. Its largest investor is Jim Simons' Renaissance Technologies since it owns 30 million shares that are worth $121 million.
Royal Gold, Inc. (NASDAQ:RGLD) is an American company headquartered in Denver, Colorado. The firm is a metals streaming company, which means that it acquires production assets of other mining companies. Royal Gold, Inc. (NASDAQ:RGLD) has assets all over the world in countries including the U.S., Australia, Mexico, and Canada
After sifting through 943 hedge funds for their March quarter of 2023 shareholdings, Insider Monkey discovered that 24 had bought stakes in the precious metals firm. Jean-Marie Eveillard's First Eagle Investment Management is Royal Gold, Inc. (NASDAQ:RGLD)'s biggest hedge fund shareholder with a $462 million stake.
Alamos Gold Inc. (NYSE:AGI), as the name suggests, is a gold company. However, it also explores silver, and the firm has mines in Canada, Mexico, and the U.S.
As of March 2023, 25 of the 943 hedge funds part of Insider Monkey's database had invested in Alamos Gold Inc. (NYSE:AGI). The firm's largest investor is Jean-Marie Eveillard's First Eagle Investment Management since it owns $129 million worth of shares.
Kinross Gold Corporation (NYSE:KGC) is a Canadian gold and silver company. It develops mining properties in the U.S., Canada, Chile, and other countries. The firm is headquartered in Toronto, Canada.
After digging through 943 hedge funds for their first quarter of 2023 shareholdings, Insider Monkey discovered that 26 had bought the company's shares. Kinross Gold Corporation (NYSE:KGC)'s biggest hedge fund shareholder in our database is Jim Simons' Renaissance Technologies since it owns 25 million shares that are worth $120 million.
Agnico Eagle Mines Limited (NYSE:AEM), Kinross Gold Corporation (NYSE:KGC), Newmont Corporation (NYSE:NEM), and Barrick Gold Corporation (NYSE:GOLD) are some best precious metals stocks on the hedge fund radar.
