Regarded as a safe investment option, hedging investors against inflation, Gold has been a highly demanded precious metal historically. As such, in 2023, the precious metal’s demand soared by 3% year-over-year (YoY), hitting the 4,899 tons mark. This is on the back of growing demand from emerging markets like India and China, who were responsible for 75% of this demand. This ever-increasing trajectory of demand is expected to continue in the current year as well which is going to be discussed below.
Amidst the inflationary state in the U.S. for the past while, and the resulting uncertainty in the market, gold has seen its prices rise in 2023, reaching its all-time high, on the back of 13% increase. The increase in demand mainly came from central banks, the industrial sector, and investors. A trend was also observed in 2023, wherein the global sovereign wealth funds were reported to be increasing their holdings in the precious metal.
The price of gold is a complex mechanism, as it is impacted by several factors like demand, market stability, and interest rates, to name a few. Nevertheless, several analysts are looking to a positive future for gold, as they expect the prices to be sitting somewhere between $2,421.00 and $2,651.00 (per ounce rate) by the current year end, as compared to its current price of $2374.31, as of writing this article.
This trend is also shaping up on the back of the Fed’s plans for a rate cut later in the year, as the gold prices usually have an inverse relationship with the market interest rate. As such, the rate cut that is expected to occur somewhere in September is also helping analysts forecast the precious metal’s price increase in 2024.
Following is what was spoken about the gold market by an analyst at PrimeXBT, Kathryn Davies, in June 2024:
“Gold has fallen from its all-time high of $2,222 after the SNB cut rates, boosting the USD. However, the gold price remains supported by the prospect of Federal Reserve rate cuts and a lower interest rate environment globally. Elevated geopolitical tensions and central bank purchases also keep demand high, and the price supported. As a result, Gold could see more all-time highs as we progress through 2024, rising to $2400 by the year’s end.”
In terms of the global market, China is a crucial player in the gold market – China is not only the largest producer of gold (producing 12% of gold in 2023), but also the largest consumer of gold, with its central bank, on its own, buying 225 tons of gold in 2023, up from 62 tons in the previous year. Analysts have attributed China's massive buying of gold to the freezing of Russian assets by the U.S. and its allies, which China is attempting to hedge itself from by buying Gold - pushing up the gold prices by doing so.
Australia and Russia closely follow China in the gold production game; in 2023, China, Russia, and Australia recorded a gold production volume of 375 tons, 325 tons, and 314 tons, respectively. The U.S. was placed 5th on the same list created by Insider Monkey, with a production volume of 173 tons! To date, 209,000 tons of gold have been mined across the globe, equaling a value of massive $12 trillion!
Having discussed the expected future of gold prices, it’s time we explore the world of gold stocks, which directly correlate with the gold price trajectory. Thus, let’s now jump to our list of 10 Best Gold Stocks to Buy According to Reddit and Robinhood.
Methodology
Extensive research across the Reddit discussion forums, along with the Robinhood Index, helped us in curating our preliminary list of all the stocks discussed across the two sources. Based on the analysts' sentiment regarding each stock across both sources, we assigned the Reddit score and Robinhood score to the stocks and ranked them based on the average score, which we will refer to as the Overall score. Lower the score, better the ranking of stock. For stocks with an equal Overall score, we used Reddit score as the tiebreaker.
The overall score was derived from the number of upticks on Reddit forums against the respective stocks, and the number of analysts assigning buy ratings to the respective stocks on Robinhood. We also peeked into Insider Monkey’s database that tracks the activity of 920 hedge funds, wherein we collected information about the hedge fund investors’ holders of all these stocks to reaffirm the respective stocks' sentiment across the two sources.
Why are we interested in 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).
A gold mine entry with a conveyor belt transporting minerals from the depths of a shaft.
Newmont Corporation engages in exploration and production of gold, along with copper, silver, zinc, and lead, with its operations based in North America, South America, Australia, and several other regions. Newmont Corporation (NYSE:NEM) is one of the top mining companies in the world by revenue, despite its below-par relative performance in the last few years to its peers – it has been seen lagging behind not only its peers but also gold prices. As a result, it has been unable to perform according to its guidance.
However, in Q1 2024, the company was able to realize a gold price of $2,090, up by 9.7% from a year ago. The company recorded an adjusted EPS of $0.55 per share, which was an increase from $0.4 recorded a year earlier. Increased production of 1.7 million ounces in the quarter as compared to 1.3 million ounces in the same period a year ago, along with consistently rising gold prices helped Newmont Corporation (NYSE:NEM) bag an adjusted net income of $630 million in the quarter, up by 97% form the quarter a year ago.
Amidst the rising gold prices, analysts at Reddit seemed to be putting a lot of faith in the stock, mainly due to the reputation of the company. Post acquisition of Newcrest last year, the consolidated mineral reserves amounted to 128 million ounces, which were up 40% to the prior year. This reserve size of Newmont is almost equivalent to Barrick Gold and Agnico Eagle reserves combined! Thus, this reputation of the company having the largest mineral reserves will serve the investors well in the long run, as it promises company's strength and growth in the long term.
In addition to this, the new Goldrush mine, in which Newmont has a 38.5% ownership, is also going operational, with its 2024 ramp up production to be around 130,000 ounces in 2024, further expected to reach 400,000 ounces production level by 2028.
With an annual dividend of $1 per share, offering a yield of 2.27%, the stock is also one of the best gold dividend stocks to buy. Accordingly, the company paid out a dividend of $0.25 in the first quarter of 2024. The generation of cash worth $1.4 billion in the quarter, thanks to improved operational cashflows because of higher realized gold prices, further speaks about strong cash position of the company, demonstrating the company’s growth prospects in the future.
As a result, the stock price has experienced a 15.3% increase in the last one month, and analysts have set a target price of $49.85, as compared to its current price of $44.13, which translates into the stock’s upside of 12.96%, which is realizable given the company is on track to achieve its full year production guidance post its Newcrest acquisition. As such, there is seen an increase of 8 hedge fund holders taking up a stake in the stock over the last quarter, taking the invested value to a whopping $925 million, as of Q1 2024.
Overall NEM ranks 3rd on our list of the best gold stocks to buy according to Reddit and Robinhood. You can visit 10 Best Gold Stocks to Buy According to Reddit and Robinhoodto see the other gold stocks that are on hedge funds’ radar. While we acknowledge the potential of NEM as an investment, our conviction lies in the belief that 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 NEM but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.
