10 Best Gold Stocks to Buy in 2021

·10 min read

In this article we presented the 10 best gold stocks to buy in 2021. You can skip our detailed discussion of the gold mining industry and read the 5 Best Gold Stocks to Buy in 2021.

The year 2020 had many challenges, with the worst of them being the global pandemic which had a major negative impact on global markets. However, it was a great year for gold. The precious metal rallied courtesy of increased demand resulting from investors who used it as a safe haven.

Fiat currencies such as the U.S dollar became extremely volatile in 2020 as a result of the pandemic. Gold’s performance remain steady during times of economic disruption.

Best Gold Stocks to Buy in 2021

Gold’s performance will largely depend on economic performance and whether the coronavirus will continue to be a problem. Investors will likely start shifting their attention to riskier investments if the coronavirus is eliminated, but on the other hand, the demand for gold will remain high if more variants make the pandemic difficult to eliminate. In case things do not pan out, investing in gold will remain a good idea.

During the period 1973 and 1974 gold posted 60% gains, compared to 20% loss in S&P 500 Index. It posted a return of 24% in 2020, best so far since 2010, hitting a high of $2,075 an ounce in August. Since then it has consolidated and trading in the range of $1,800 and $2,000 and lost 17%. JPMorgan’s Natasha Kaneva expects the price to fall to $1,650 an ounce by this year end. Notable gold companies are posting sterling results. For example, Barrick Gold (NYSE:GOLD) recently said that it is on track to meet its full-year 2021 guidance. Even though the company said that its Q1 production was less than expected amid mine sequencing at Carlin and Cortez and lower grades at Pueblo Viejo, Barrick Gold (NYSE:GOLD) expects upbeat results in the second half of 2021, thanks to stronger pricing.

Similarly, another famous gold company Wheaton Precious Metals (NYSE:WPM) said its adjusted earnings in the fourth quarter nearly doubled from a year ago and its revenue jumped 28% on a year-over-year basis. In 2020, Wheaton Precious Metals (NYSE:WPM) said its average cash costs were $425 per gold equiv. oz., up from $411 in 2019, which resulted in a 38% jumped in cash operating margin per gold equiv. oz. sold. Another major name making waves is Newmont (NYSE:NEM), which was recently added by Bank of America to its high-conviction buy list. The bank, which added several other stocks to its buy list, likes Newmont (NYSE:NEM) because of gold prices and future growth catalysts.

It's not just the gold which is in flux. The entire hedge fund industry is feeling the reverberations of the changing financial landscape. Its reputation has been tarnished in the last decade, during which its hedged returns couldn’t keep up with the unhedged returns of the market indices. On the other hand, Insider Monkey’s research was able to identify in advance a select group of hedge fund holdings that outperformed the S&P 500 ETFs by more than 124 percentage points since March 2017. Between March 2017 and February 26th 2021 our monthly newsletter’s stock picks returned 197.2%, vs. 72.4% for the SPY. Our stock picks outperformed the market by more than 124 percentage points (see the details here). We were also able to identify in advance a select group of hedge fund holdings that significantly underperformed the market. We have been tracking and sharing the list of these stocks since February 2017 and they lost 13% through November 16th. That’s why we believe hedge fund sentiment is an extremely useful indicator that investors should pay attention to. You can subscribe to our free newsletter on our homepage to receive our stories in your inbox.

Gold has gained popularity ever since the pandemic hit, and so has its demand thanks to investors looking to protect their wealth from economic uncertainties. One of the most liquid ways of taking advantage of the demand for gold is by buying gold stocks. Here are some of the best gold stocks that can help you optimize your investment in the precious metal.

10 Best Gold Stocks to Buy in 2021
10 Best Gold Stocks to Buy in 2021

Copyright: tomas1111 / 123RF Stock Photo

10. Royal Gold, Inc (NASDAQ: RGLD)

No. of Hedge Fund Holders: 26

Royal Gold, Inc (NASDAQ: RGLD) deals with the acquisition of precious metals streams, as well as related interests, including royalties. The company has a particular focus on the acquisition of royalty interests and stream and financing projects in the development or production stage. It has interests in various metals, including gold, molybdenum, cobalt, lead, zinc, nickel, copper, and silver. The company had interests in 187 properties across the world by June 30, 2020. This includes 41 mines that have already reached the production stage and 16 projects in the development stage. The diversification, capacity, and extent of operations make it one of the best gold stocks to buy.

Royal Gold had 26 hedge fund investors in Q4 2020, led by First Eagle with over 2.6 million shares. The company sold 36,000 ounces of gold, 2,000 ounces of copper, and 484,000 ounces of silver in the quarter ended March 31, 2021. The metals were priced at $1,828 per ounce of gold, $26.44 per ounce of silver, and $8,575 per ton of copper. The stock lost 5.81% over the last one year.

In their Q1 2021 investor letter, Argosy Investors highlighted a few stocks and Royal Gold Inc (NASDAQ:RGLD) is one of them. Here is what the fund said:

"Gold royalties business achieve 2 objectives for us: 1) It’s a good business model with strong returns through the gold price cycle; and 2) it provides some protection from inflation, should it materialize due to the increasingly loose fiscal and monetary policy decisions the United States (and other developed market economies) is making.

I don’t want to stay on my soapbox for too long, but this is the first time in history that I’m aware of politicians openly stating that debt levels don’t matter, even in the long term. In 2019, the government spent $4.4 trillion. Of those expenditures, $0.4 trillion was spent making interest payments on existing debt at the time of $16.9 trillion. The interest rate on that debt was 2.4%. Debt for 2021 is projected to increase to $22.5 trillion, and then to $33 trillion by the end of the decade.

I don’t have a crystal ball, but if interest rates increased to previously “normal” levels of only 5%, U.S. interest payments would be over $1.1 billion in 2021, 25% of U.S. total expenditures in 2019. In the event that happens, there are a few choices: 1) run a larger deficit which could lead to accelerating debt levels; 2) reduce government spending on things like the military, Medicare, Social Security, pensions, and other programs; or 3) the government allows or encourages inflation to reduce the value of its debt obligations.

To be clear, this spiraling debt outcome currently seems and likely is not happening within the next several years, but the probability of it occurring is not zero and things have changed rapidly before. For that reason, I think an investment in Royal Gold provides some minor insulation against inflation.”

9. Gold Fields Limited (NYSE: GFI)

No. of Hedge Fund Holders: 15

Gold Fields is a gold and copper producing company whose operations extend into multiple countries, including South Africa, Peru, Ghana, and Australia. Some of its mine assets include South Deep in South Africa, Yilgarn South, St. Ives mine and Agnew mines in Australia, Damang gold mine and Tarkwa gold mine, and the Cerro Corona mine in Peru.

Gold Fields Limited (NYSE: GFI) had 15 hedge fund shareholders in Q4 2020, and Renaissance Technologies had the largest hedge fund shareholding at 13.4 million shares. The company was recently approved to set up a 40-megawatt solar power facility at the South Deep mine. GFI Gold’s board of directors appointed Chris Griffith as the company’s new Executive Director and CEO. The company’s net earnings range for the full year 2010 is expected to be between $0.98 and $1.02 per share. The company’s normalized earnings in FY2019 was $0.42.

The basic earnings per share target range for FY 2020 is between $0.80 and $0.84 per share, notably higher than the FY 2019 basic earnings per share of $0.20 per share. The company’s earnings highlight its position as one of the best gold stocks available for investors. The stock gained 21.57% over the last one year.

8. Kirkland Lake Gold Ltd. (NYSE: KL)

No. of Hedge Fund Holders: 24

KL Kirkland Lake Gold Ltd is one of the leading gold producers in Australia and Canada. It produced 1.36 million ounces of gold last year and its target this year is to produce between 1.3 million and 1.4 million ounces of gold in 2021. The target production is supported by high-quality mines such as the Fosterville Mine in Victoria, Australia, as well as the Detour Lake mine and Macassa mine in the Northern region of Ontario, Canada. These factors make the company more appealing as one of the best gold stocks for investors to consider.

Kirkland Lake Gold Ltd. (NYSE: KL) had 24 hedge funds in Q4 2020, led by Renaissance Technologies with 3.4 million shares. It produced 371,009 ounces of gold in Q4 2020, priced at ($1,875 per ounce). KL Kirkland’s production target between 2021 and 2024 is between 680,000 and 720,000 oz. The stock lost 10.17% over the last one year.

7. Sibanye Stillwater Limited (NYSE: SBSW)

No. of Hedge Fund Holders: 17

Sibanye-Stillwater has a diversified and robust portfolio of platinum group metal (PGM) production in South Africa and the U.S. It also runs one of the biggest gold exploration activities globally, with mining operations in South Africa and Latin America. The company had 17 hedge funds invested in its stock in Q4 2020. AQR Capital Management had the largest shareholding at 4.9 million shares.

Sibanye Stillwater Limited (NYSE: SBSW) released its half-year and full-year 2020 financials revealing record figures. The company’s net profit in 2020 was R29,312 million (US$1.78 billion), which was 47 times more than the R62 million (US$5 million) attributable profit that is reported in 2019. This was the company's highest net profit since 2013, when it commenced its operations.

The gold mining company followed up the impressive profit figures with a full year heavily impressive dividend at 371 cents per share (US$25.15 cents per share), making it one of the best gold stocks as far as dividends are concerned. The company's full-year revenue was $8.65 billion, and its net profit for the entire year was $1.78B net profit. The stock gained 146.73% over the last one year.

6. Agnico Eagle Mines Limited (NYSE: AEM)

No. of Hedge Fund Holders: 36

Agnico Eagle is one of Canada's top gold mining companies, with a track record that spans 6 decades. The company has operations in multiple countries, including Canada, Mexico, and Finland. It also has mining activities in Sweden and the United States. AEM Agnico has a history of paying dividends every year from 1983. This consistency and healthy dividend payouts are the reasons why it is one of the best gold stocks.

The company had 36 hedge funds invested in its stock in Q4 2020 of total 800. AEM Agnico announced its latest financials in February 2021, revealing that its Q4 2020 net income was $205.22 million, equivalent to $0.84 per diluted share. It was notably lower than the $331.7 million or $1.39 per share net income reported in the previous quarter. Its quarterly revenue in Q4 2020 experienced a 23% YoY growth. The company expects to produce between 2.05M oz. and 2.1M oz of gold in 2021.

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Disclosure: None. 10 Best Gold Stocks to Buy in 2021 is originally published on Insider Monkey.