Gold is one asset class that continues to captivate the financial markets, with prices rallying to record highs and showing no signs of slowing down. After powering to record highs of $2,790 an ounce last year, the precious metal is again edging higher, having powered through the $2900 level and on the cusp of the $3,000 psychological level.
The rally to record highs comes against escalating geopolitical tensions and economic uncertainty. While Israel has reached a cease-fire on the Gaza Strip, tensions are far from over with the ever-growing threat from Iran and the ongoing Russia-Ukraine conflict. Similarly, US President Donald has evoked economic uncertainty with a string of trade tariffs that threaten to plummet the global economy into disarray.
"Central focus of the gold market continues to be the uncertainty in regards to the Trump tariff policies," said David Meger, director of metals trading at High Ridge Futures.
China's retaliatory measures against US tariffs are increasingly fueling safe-haven demand, exacerbated by the US threatening to hit Canada, Mexico, and Europe with similar tariffs. The geopolitical tensions and economic uncertainties are why analysts at Citi are optimistic about gold powering through the $3,000 an ounce level amid strong demand as a safe haven in times of turmoil and uncertainty.
As a result of Trump's tariff threats, which have increased investor anxiety over global growth, trade wars, and high inflation, gold has already reached its seventh-record high this year. Gold's explosive rally since December, according to Phillip Streible, chief market strategist at Blue Line Futures, may result in a self-fulfilling prophecy of additional price increases, which could cause the research firm to increase its forecast to about $3,250 or $3,500. Analysts at UBS share similar sentiments and expect a gold price rally to persist in 2025 to above the $3,000 an ounce level.
While data from the World Gold Council indicates that gold demand hit record highs of 4,974.5 metric tons last year, the buying momentum is unlikely to stop. Central banks are increasingly purchasing precious metals, which are seen as a solid store of value away from the dollar and other assets susceptible to heightened market volatility. Higher rates lessen the allure of the non-yielding asset, but historically, bullion has been seen as a hedge against inflation and geopolitical unpredictability.
"Gold prices could reach $3,000 this year due to the disruptive nature of the current U.S. administration creating market uncertainty and central banks potentially increasing gold purchases to diversify from U.S. dollar holdings," Jim Wyckoff, a senior market analyst at Kitco Metals, said.
Gold provides stability during economic turbulence. Its adaptability and timeless appeal have increased its value over centuries. As market uncertainties persist, gold stocks are gaining popularity among investors due to their potential for higher prices and secure store of value.
Our Methodology
To make the list of 10 best gold stocks to invest in for portfolio diversification, we scanned the US market and settled on the top gold companies with significant resource reserves. We then analyzed the stocks and settled on those with solid underlying fundamentals and tremendous potential as long-term investment plays. Finally, we ranked the stocks in ascending order based on the number of hedge fund holders.
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).
Is Royal Gold, Inc. (RGLD) the Best Gold Mining Company to Invest in Right Now?
A mine entrance, showcasing the precious metals and minerals that this company produces.
Royal Gold, Inc. (NASDAQ:RGLD) acquires and manages precious metal streams, royalties, and related interests. It receives streams and royalty interests and finances projects, which primarily consist of gold, silver, copper, nickel, zinc, lead, and other metals. The company's edge as one of the best gold stocks to invest in stems from its debt-free nature at the end of the third quarter. It also had access to a $1 billion revolving credit facility that it can use to strengthen its metals streams, royalties, and other interests. The Company owns interests in 175 properties On five continents, including 42 producing mines and 18 development-stage projects.
Additionally, Royal Gold, Inc. (NASDAQ:RGLD) sold about $36,600 ounces of gold at an average price of $2,662 per ounce at the end of last year. Likewise, the company is well positioned to take advantage of the favorable gold price environment, with prices above $2,900, as it had about 15,500 ounces of Gold as of the end of last year.
In addition, Royal Gold, Inc. (NASDAQ:RGLD) boasts of a highly diversified revenue base, having sold about 478,900 ounces of silver and 1,3000 tons of copper related to its streaming agreements for the three months ended December. It also entered the new year with about 338,400 ounces of silver from which it can profit from soaring prices.
Overall RGLD ranks 6th on our list of the best gold stocks to buy for portfolio diversification. While we acknowledge the potential of RGLD as an investment, our conviction lies in the belief that certain AI stocks hold greater promise for delivering higher returns, and doing so within a shorter timeframe. 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.
