10 Best Gold Royalty and Small-Cap Gold Stocks To Buy

In this article, we discuss 10 best gold royalty and small-cap gold stocks to buy.

On May 5, The World Gold Council stated that while there was a decrease in Q1 gold demand (excluding OTC) by 13% compared to the previous year, there were positive factors such as central bank buying and increased demand from Chinese consumers. However, there were negative contributions from ETFs and weakness in India. When including OTC, total gold demand showed a 1% increase year-on-year to 1,174 tonnes due to a recovery in OTC investment, which balanced out the weakness in some areas, in line with investor positioning in the futures market. Central banks experienced significant growth in demand during the quarter, with official sector institutions showing continued interest and purchasing 228 tonnes of gold to add to their reserves globally. According to the World Gold Council, investment in gold is expected to show healthy growth this year, while the outlook for fabrication (which includes jewellery and technology) is not as strong. Central bank buying is expected to remain strong, but is unlikely to reach the record levels seen in 2022. Both mine production and recycling are expected to show modest growth.

Companies in the gold market are thriving and issuing positive outlooks for this year. Barrick Gold Corporation (NYSE:GOLD), a major Canadian player that engages in the exploration, mine development, production, and sale of gold and copper properties, is focused on organic growth by exploring and managing mineral resources and this has resulted in the replacement of gold reserves for the second consecutive year. In addition, the company has significantly increased its copper resources compared to the previous year, which supports both its 10-year production forecast and its growth plan. Mark Bristow, the President and Chief Executive of Barrick, announced the company’s results for the fourth quarter and the entire year of 2022, stating that Barrick has always believed that discovering gold reserves is more advantageous than purchasing them at a high premium, particularly in a sector where reserves and resources are declining. In the fourth quarter, Barrick Gold Corporation (NYSE:GOLD)’s long-term corporate credit rating was upgraded by Moody’s from Baa1 to A3, which made the company the highest-rated gold mining company in the sector.

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U.S. Global Investors cited Ole Hansen, a commodity strategist at Denmark’s Saxo Bank, who believes that gold could potentially reach up to $4,000 once markets come to the realization that global inflation will remain high despite monetary tightening. Hansen also mentioned three other factors that could contribute to new record highs for gold in 2023. Firstly, an increasing “war economy mentality” could discourage central banks from holding foreign exchange reserves and instead lean towards gold as a means of self-reliance. Secondly, governments may continue to increase deficit spending on ambitious projects such as the energy transition. And finally, the possibility of a global recession in 2023 could prompt central banks to increase liquidity. However, Hansen has stated that his comments are more of a thought experiment and less of a prediction.

To benefit from the growing opportunities in the sector, some of the best gold stocks to invest in include Franco-Nevada Corporation (NYSE:FNV), Royal Gold, Inc. (NASDAQ:RGLD), and Wheaton Precious Metals Corp. (NYSE:WPM). 

Our Methodology 

We scanned Insider Monkey’s database of 943 hedge funds and picked the top 10 companies that operate in the gold royalty and gold mining sector with the highest number of hedge fund investors. The gold royalty firms were chosen irrespective of their market cap, while small-cap gold stocks were picked based on market caps between $300 million and $2 billion as of May 10. These are the best gold stocks to buy according to hedge funds.

Photo by Gold-bar-jingming-pan on Unsplash

Best Gold Royalty and Small-Cap Gold Stocks To Buy

10. Seabridge Gold Inc. (NYSE:SA)

Number of Hedge Fund Holders: 12

Seabridge Gold Inc. (NYSE:SA) is involved in purchasing and researching gold sites in North America. The organization also conducts searches for deposits of copper, silver, and molybdenum, in addition to gold. 

On November 21, 2022, B. Riley analyst Lucas Pipes raised the firm’s price target on Seabridge Gold Inc. (NYSE:SA) to $60 from $57 and kept a Buy rating on the shares following the Q3 results. The analyst indicated that Seabridge Gold Inc. (NYSE:SA) is progressing with various initiatives that support the beginning of the flagship KSM project and expects it to be a significant achievement.

According to Insider Monkey’s fourth quarter database, 12 hedge funds were bullish on Seabridge Gold Inc. (NYSE:SA), compared to 13 funds in the prior quarter. David Iben’s Kopernik Global Investors is the biggest stakeholder of the company, with 2.6 million shares worth $33.6 million. 

In addition to Franco-Nevada Corporation (NYSE:FNV), Royal Gold, Inc. (NASDAQ:RGLD), and Wheaton Precious Metals Corp. (NYSE:WPM), Seabridge Gold Inc. (NYSE:SA) is one of the best gold stocks to buy. 

Old West Management made the following comment about Seabridge Gold Inc. (NYSE:SA) in its Q4 2022 investor letter:

“Seabridge Gold Inc. (NYSE:SA) was founded by current chairman and CEO Rudi Fronk in 1999. To say Seabridge is Fronk’s life work would be accurate. Fronk, who has two degrees in mining and minerals, is a top shareholder of the company. Seabridge owns the KSM project in northwestern British Colombia. KSM has proven and probable reserves of 47 million ounces of gold and 7 billion pounds of copper. Seabridge also owns attractive deposits in Nevada and Northwest territories of Canada, although much smaller than KSM. The average grade of KSM’s gold deposit is less than one gram per ton, but there is good accessibility to the site, and it is in the safe jurisdiction of mining friendly Canada.

Seabridge’s market cap is C $1.5 billion, they have no long term debt and C $200 million cash. They have been burning C $75 million of cash per year. The company is openly looking to partner with a major miner to develop their properties.”

9. Equinox Gold Corp. (NYSE:EQX)

Number of Hedge Fund Holders: 13

Equinox Gold Corp. (NYSE:EQX) is involved in the exploration, acquisition, operation, and development of mineral properties, headquartered in Vancouver, Canada. The company’s primary focus is searching for deposits of gold and silver. Equinox Gold Corp. (NYSE:EQX) owns gold mines situated in California, Mexico, and Brazil. It is one of the best gold stocks to invest in. After announcing a Q1 adjusted loss that was less than anticipated and revealing that its Greenstone gold project is 73% completed and scheduled to pour first gold in H1 2024, shares of Equinox Gold (NYSE:EQX) surged 9.6% on May 3.

On May 4, Canaccord analyst Dalton Baretto maintained a Buy rating on Equinox Gold Corp. (NYSE:EQX) but lowered the firm’s price target on the shares to C$8.50 from C$9. 

According to Insider Monkey’s fourth quarter database, 13 hedge funds were bullish on Equinox Gold Corp. (NYSE:EQX), with collective stakes worth $42.7 million, compared to 7 funds in the prior quarter worth $35.2 million. Eric Sprott’s Sprott Asset Management is the biggest stakeholder of the company, with 7.13 million shares worth $23.3 million. 

Massif Capital made the following comment about Equinox Gold Corp. (NYSE:EQX) in its Q1 2023 investor letter:

“Equinox Gold Corp. (NYSE:EQX) was our best-performing investment during the first quarter, returning 57%, outperforming the broader gold sector as measured by the GDX and GDXJ by more than 40% and outperforming gold by roughly 50%. The outperformance was not driven by fundamental factors at the company but rather by a combination of sector sentiment and a beta to the gold price of 3.1. We believe that fundamental factors, specifically the conclusion of construction and eventual ramp-up of the Greenstone mine during the first half of next year, represent potent catalysts for EQX, but this quarter’s appreciation was not fundamentally driven.

While we are pleased with the excellent performance during the first quarter, we would be remiss if we did not point out that the stock remains well below the high of roughly $13.50 achieved in 2020, a price at which we owned the stock. While we are in the black on the position despite a 62% fall from the stock peak, our failure to exit the position at that time remains a painful portfolio management misstep…” (Please click here to read the full text)

8. New Gold Inc. (NYSE:NGD)

Number of Hedge Fund Holders: 14

New Gold Inc. (NYSE:NGD) is a gold mining company that operates at an intermediate level and is involved in the exploration, development, and operation of mineral properties. The primary focus of its exploration efforts is on gold, silver, and copper deposits. The company’s main operating properties are situated in Ontario and British Columbia in Canada, as well as Mexico. It is one of the best gold stocks to watch. 

On April 26, New Gold Inc. (NYSE:NGD) reported a Q1 non-GAAP EPS of $0.03 and a revenue of $201.6 million, outperforming Wall Street estimates by $0.01 and $9.89 million, respectively. Revenue over the period climbed 15.4% on a year-over-year basis. 

National Bank analyst Mike Parkin reiterated a Sector Perform rating on New Gold Inc. (NYSE:NGD) and trimmed the firm’s price target on the shares to C$2 from C$2.25. 

According to Insider Monkey’s fourth quarter database, 14 hedge funds were bullish on New Gold Inc. (NYSE:NGD), with combined stakes worth $40.2 million. Sprott Asset Management is the biggest stakeholder of the company, with 13.6 million shares worth $13.3 million. 

7. Sandstorm Gold Ltd. (NYSE:SAND)

Number of Hedge Fund Holders: 16

Sandstorm Gold Ltd. (NYSE:SAND) functions as a company that specializes in gold royalties. It concentrates on obtaining royalties and purchasing agreements for gold and other metals from companies that possess advanced-stage development projects or operating mines. Sandstorm Gold Ltd. (NYSE:SAND) makes initial payments to purchase a stream or royalty from companies and, in return, obtains the privilege of acquiring a percentage of the mine’s output for the duration of the mine’s operation at a predetermined price per unit or at a fixed percentage of the spot price. 

On April 5, Sandstorm Gold Ltd. (NYSE:SAND) announced that it achieved two company records during Q1 2023 – the sale of 28,400 attributable gold equivalent ounces and preliminary revenues of $44 million. 

National Bank analyst Shane Nagle on April 18 raised the firm’s price target on Sandstorm Gold Ltd. (NYSE:SAND) to C$9.25 from C$8 and maintained an Outperform rating on the shares.

According to Insider Monkey’s fourth quarter database, 16 hedge funds were bullish on Sandstorm Gold Ltd. (NYSE:SAND), compared to 15 funds in the prior quarter. Murray Stahl’s Horizon Asset Management is the largest stakeholder of the company, with 6.36 million shares worth $33.5 million. 

6. Coeur Mining, Inc. (NYSE:CDE)

Number of Hedge Fund Holders: 17

Coeur Mining, Inc. (NYSE:CDE) conducts exploration activities for valuable metals in Mexico, Canada, and the United States. Its primary focus is on searching for gold, silver, zinc, and lead properties. The company possesses mining properties and interests located in various regions, including Northern Mexico, Nevada, Alaska, South Dakota, and British Columbia. 

As per Q4 reports, Coeur Mining, Inc. (NYSE:CDE) anticipates producing 320,000 to 370,000 ounces of gold and 10.0 to 12.0 million ounces of silver in 2023. The increase in production is predicted to be driven by a planned ramp-up at Rochester after the completion of the POA 11 expansion project, which is expected to generate significant silver and gold production increases in the second half of the year. Additionally, higher gold production from the Wharf gold operation is expected to contribute to the production increase.

On January 19, Dalton Baretto, an analyst at Canaccord, raised his rating for Coeur Mining, Inc. (NYSE:CDE) from Sell to Hold, and increased his price target from $3 to $4. 

According to Insider Monkey’s fourth quarter database, 17 hedge funds were long Coeur Mining, Inc. (NYSE:CDE), compared to 14 funds in the prior quarter. Ken Griffin’s Citadel Investment Group is the biggest stakeholder of the company, 2.36 million shares worth $8 million. 

Like Franco-Nevada Corporation (NYSE:FNV), Royal Gold, Inc. (NASDAQ:RGLD), and Wheaton Precious Metals Corp. (NYSE:WPM), elite hedge funds are piling into Coeur Mining, Inc. (NYSE:CDE) for exposure to the gold market.

5. Osisko Gold Royalties Ltd (NYSE:OR)

Number of Hedge Fund Holders: 18

Osisko Gold Royalties Ltd (NYSE:OR) is a company that purchases and oversees royalties, streams, and other interests in precious metals and other assets in Canada and around the world. Additionally, Osisko Gold Royalties Ltd (NYSE:OR) possesses options for offtake, royalty/stream financings, and exclusive rights to participate in future royalty/stream financings for different projects. On February 23, the company reported a Q4 non-GAAP EPS of C$0.19 and a revenue of C$61.9 million, up 22.2% on a year-over-year basis. It is one of the best gold stocks to invest in. 

According to Insider Monkey’s fourth quarter database, 18 hedge funds were bullish on Osisko Gold Royalties Ltd (NYSE:OR), compared to 20 funds in the prior quarter. Eric Sprott’s Sprott Asset Management is the biggest position holder in the company, with 3.4 million shares worth $41.8 million. 

Palm Valley Capital Management made the following comment about Osisko Gold Royalties Ltd (NYSE:OR) in its Q1 2023 investor letter:

“We did not purchase any new holdings for the Fund during the first quarter. In January, we sold one position: Osisko Gold Royalties Ltd (NYSE:OR). Osisko reported record royalty and streaming revenues as it has steadily grown its portfolio of assets, which is skewed toward Canada—considered to be the highest quality jurisdiction for miners. The company recently deconsolidated the results of mining developer Osisko Development from its financials, clarifying Osisko Royalties’ business model for less familiar investors. Each quarter, we update the company’s NAV based on the underlying value of each of its key royalty and streaming interests, in addition to the net financial assets it holds. Osisko’s share price exceeded our estimate of NAV, so we sold the position.”

4. IAMGOLD Corporation (NYSE:IAG)

Number of Hedge Fund Holders: 18

IAMGOLD Corporation (NYSE:IAG) conducts exploration, development, and operations of gold mining properties located in West Africa and North America. It is one of the premier gold stocks to buy. On May 1, BMO Capital raised IAMGOLD Corporation (NYSE:IAG)’s rating from Market Perform to Outperform and increased the price target to $3.25 from $2. According to the analyst’s research note, IAMGold has experienced a “remarkable financial recovery” in recent months by divesting some of its higher cost and higher risk assets. The firm predicts a forthcoming recovery in operations, but it also noted the risks associated with the startup at Cote.

According to Insider Monkey’s fourth quarter database, 18 hedge funds were bullish on IAMGOLD Corporation (NYSE:IAG), compared to 12 funds in the prior quarter. David Iben’s Kopernik Global Investors is the biggest stakeholder of the company, with 24 million shares worth $62 million. 

3. Royal Gold, Inc. (NASDAQ:RGLD)

Number of Hedge Fund Holders: 22

Royal Gold, Inc. (NASDAQ:RGLD) acquires and manages precious metal streams, royalties, and related interests, primarily consisting of gold, silver, copper, nickel, zinc, lead, and other metals. They finance projects that are in production, development, or exploration stages, and acquire stream or royalty interests in exchange. The company has stream and royalty interests on properties located in various countries such as the United States, Canada, Chile, Australia, Mexico, and others. It is one of the best gold stocks to invest in.

On May 3, Royal Gold, Inc. (NASDAQ:RGLD) reported a Q1 non-GAAP EPS of $0.96, in line with market estimates. Revenue for the period came in at $170.4 million, up 4.9% year-over-year, beating Wall Street consensus by $7.63 million. 

Matthew Murphy, an analyst from Barclays, increased the price target for Royal Gold, Inc. (NASDAQ:RGLD)’s shares from $119 to $122 and maintained an Equal Weight rating. In a research note to investors, Murphy stated that the global economy has exceeded expectations in the first quarter, and the supply side has encountered difficulties. The firm has once again increased its medium-term projections for copper and gold prices, but still anticipates a decline from current levels. As “consolidation takes hold,” the analyst has raised the targets and multiples for base metal prices but continues to favor gold over base equities.

According to Insider Monkey’s fourth quarter database, 22 hedge funds were bullish on Royal Gold, Inc. (NASDAQ:RGLD), compared to 24 funds in the prior quarter. Jean-Marie Eveillard’s First Eagle Investment Management is the biggest stakeholder of the company, with 3.5 million shares worth $404 million. 

Argosy Investors released its Q1 2021 investor letter and mentioned Royal Gold, Inc. (NASDAQ:RGLD). Here is what the firm 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.”

2. Franco-Nevada Corporation (NYSE:FNV)

Number of Hedge Fund Holders: 27

Franco-Nevada Corporation (NYSE:FNV) specializes in royalties and streaming in the gold industry. The company operates in Latin America, the United States, and Canada. Franco-Nevada Corporation (NYSE:FNV) primarily focuses on precious metals including gold, silver, and platinum group metals, and also participates in the selling of crude oil, natural gas, and natural gas liquids. It is one of the best gold stocks to invest in. 

On May 4, Heiko Ihle, an analyst at H.C. Wainwright, increased the target price for Franco-Nevada Corporation (NYSE:FNV)’s shares from $145 to $180 and maintained a Buy rating. The reason for the target price increase is the recent market trends and Franco-Nevada Corporation (NYSE:FNV)’s Q1 results. 

According to Insider Monkey’s fourth quarter database, 27 hedge funds were bullish on Franco-Nevada Corporation (NYSE:FNV), compared to 28 funds in the prior quarter. Jean-Marie Eveillard’s First Eagle Investment Management is the biggest stakeholder of the company, with more than 2 million shares worth $288.6 million. 

Here is what Horizon Kinetics has to say about Franco-Nevada Corporation (NYSE:FNV) in its Q3 2022 investor letter:

“Back to basic principles. We don’t hold gold in client portfolios, we hold gold royalty companies. The two have surprisingly little in common. The gold royalty company generates very impressive profits even if the gold price never rises, and it earns those profits year after year. Here is a long-term chart of Franco Nevada Corp., the premier gold royalty company vs. gold itself: a comparable gold price today than a decade ago, yet Franco Nevada returned 12.5% annually, matching the S&P 500 return, despite its near sole source of revenues unchanged. What will Franco Nevada’s earnings and share price do if gold rises over the course of a decade?”

1. Wheaton Precious Metals Corp. (NYSE:WPM)

Number of Hedge Fund Holders: 28

Wheaton Precious Metals Corp. (NYSE:WPM)’s main markets are North America, Europe, and South America, where it primarily sells precious metals such as gold, silver, palladium, and cobalt. Wheaton Precious Metals Corp. (NYSE:WPM) is one of the top streaming and royalty companies in the world. On May 4, the company declared a quarterly dividend of $0.15 per share, in line with previous. The dividend is payable on June 2, to shareholders of record on May 19. 

On April 20, Stifel analyst Ingrid Rico raised the firm’s price target on Wheaton Precious Metals Corp. (NYSE:WPM) to C$75 from C$66 and maintained a Buy rating on the shares.

According to Insider Monkey’s fourth quarter database, 28 hedge funds were bullish on Wheaton Precious Metals Corp. (NYSE:WPM), compared to 25 funds in the earlier quarter. Murray Stahl’s Horizon Asset Management is a prominent stakeholder of the company, with 3.4 million shares worth $134.8 million.

First Eagle Investment Management released its Q2 2020 investor letter and mentioned Wheaton Precious Metals Corp. (NYSE:WPM). Here is what the firm said:

“The strength in the price of gold was generally supportive of gold-related equities whose performance historically has been leveraged to the gold price. One such example is Wheaton Precious Metals, a Canadian streaming company that maintains, in our view, a high-quality, low-cost portfolio of precious metal purchase agreements that is well diversified across mining partners, geographies and metal types. Despite pandemic-related suspensions of six of its mining assets, Wheaton posted a 50% year-over-year increase in operating cash flow for the first quarter, which allowed the company to reduce its net debt while raising its quarterly dividend payment.”

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Disclosure: None. 10 Best Gold Royalty and Small-Cap Gold Stocks To Buy is originally published on Insider Monkey.