In this article, we discuss the 10 best gold stocks to buy for inflation.
Interest in gold has steadily increased in the past few months as inflation surges, interest rates rise, and some sections of the Treasury curve invert. All these factors tend to lead to outperformance for the gold sector, per historical data. In the first three months of 2022, after a below average performance in 2021, gold prices increased by a handsome 8%, the best quarterly performance for the precious metal since the second quarter of 2020. Inflows into gold ETFs also totaled $17 billion during the period, the highest since the third quarter of 2020.
The record rally in the prices of gold over the past three months, during which gold climbed above $2,000/oz, were primarily driven by rising inflation, increased geopolitical risk due to the Russian invasion of Ukraine, and a hawkish Federal Reserve. In this overall economic environment, in which oil prices have also reached record highs, investors have been flocking to safe havens like gold amid market volatility. The global economic recovery is being affected by these factors and this has led to fears around stagflation as well.
Data from the US Mint reveals that gold coin sales were around $427 million in March, pushing the total coin sales in the first quarter of 2022 to more than $1 billion. This is the highest sales volume for gold since 1999. Investors eager to profit from this boom for the gold sector should consider some of the top gold stocks to buy for inflation according to hedge funds that include Newmont Corporation (NYSE:NEM), Barrick Gold Corporation (NYSE:GOLD), and Freeport-McMoRan Inc. (NYSE:FCX).
Our Methodology
The companies that operate in the gold sector and are best positioned to offer investors some solidity amid rising inflation were selected for the list. The business fundamentals and analyst ratings for these firms are also discussed to provide readers with some additional context for their investment choices. An extensive database of around 900 elite hedge funds tracked by Insider Monkey was used to quantify the hedge fund sentiment around each stock.
Best Gold Stocks to Buy for Inflation
10. Gold Fields Limited (NYSE:GFI)
Number of Hedge Fund Holders: 13
Gold Fields Limited (NYSE:GFI) is a South Africa-based gold producer. The company does not have an impressive dividend history but is trying to build one. On March 9, it declared a quarterly dividend of $0.139 per share, in line with previous. The stock has benefited from the record rally in gold prices over the past few weeks that pushed the price of the precious metal above $2000/oz in early March. The prices of gold have not touched these highs for nearly seventeen months. Inflationary pressures have also helped gold firms improve their margins.
On April 4, JPMorgan analyst Dominic O’Kane gave Gold Fields Limited (NYSE:GFI) stock a Neutral rating with a price target of $15.30. BMO Capital has a Market Perform rating on the stock with a price target of $15.
Among the hedge funds being tracked by Insider Monkey, New York-based investment firm Renaissance Technologies is a leading shareholder in Gold Fields Limited (NYSE:GFI) with 7 million shares worth more than $77 million.
Just like Newmont Corporation (NYSE:NEM), Barrick Gold Corporation (NYSE:GOLD), and Freeport-McMoRan Inc. (NYSE:FCX), Gold Fields Limited (NYSE:GFI) is one of the stocks that hedge funds have on their radar as inflation rises.
9. Hecla Mining Company (NYSE:HL)
Number of Hedge Fund Holders: 19
Hecla Mining Company (NYSE:HL) is a precious metals mining firm. On April 12, the company posted preliminary production numbers from the first quarter of 2022, estimating that it produced 41,642 oz of gold and 3.3 million oz of silver during the period. The largest producer for Hecla in this timespan, Greens Creek, produced 2.4 million oz of silver and over 11,000 oz of gold, up slightly quarter-over-quarter due to higher grades. On February 23, the firm had declared a quarterly dividend of $0.0063 per share, an increase of $0.8% from the previous dividend.
On April 12, Roth Capital analyst Joe Reagor gave Hecla Mining Company (NYSE:HL) stock a Neutral rating with a price target of $6.50, noting that higher base metal prices were offsetting production woes for the firm in the near-term.
At the end of the fourth quarter of 2021, 19 hedge funds in the database of Insider Monkey held stakes worth $128 million in Hecla Mining Company (NYSE:HL), up from 15 in the preceding quarter worth $101 million.
8. Royal Gold, Inc. (NASDAQ:RGLD)
Number of Hedge Fund Holders: 28
Royal Gold, Inc. (NASDAQ:RGLD) purchases and manages precious metal streams, royalties, and related interests. On February 16, the company posted earnings for the second fiscal quarter of 2022, reporting earnings per share of $1.05, beating estimates by $0.14. The revenue over the period was more than $168 million, beating expectations by $7.6 million. The company will post guidance for 2022 in the coming weeks. In November, the firm had raised the quarterly dividend by close to 17% to $0.35 per share.
Royal Gold, Inc. (NASDAQ:RGLD) posted quarterly production recently, reporting a volume of more than 93,000 Gold Equivalent Troy Ounces (GEOs), up from around 84,000 GEOs from a year ago. The boost in production numbers came despite deferred ounces from Pueblo Viejo and slight delays at Khoemacau, two of the premier gold pipelines of the company.
Among the hedge funds being tracked by Insider Monkey, New York-based investment firm First Eagle Investment Management is a leading shareholder in Royal Gold, Inc. (NASDAQ:RGLD) with 3.5 million shares worth more than $369 million.
In its Q1 2021 investor letter, Argosy Investors, an asset management firm, highlighted a few stocks and Royal Gold, Inc. (NASDAQ:RGLD) was 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.” (Click here to see full text)
7. Rio Tinto Group (NYSE:RIO)
Number of Hedge Fund Holders: 22
Rio Tinto Group (NYSE:RIO) is a diversified metals and mining firm. On April 8, at an annual general meeting, the chairman of the firm, Simon Thompson, said that climate change was “at the heart” of the new strategy of the company. As part of this plan, Rio Tinto Group (NYSE:RIO) will increase research spending to develop technologies that will help customers decarbonize. The company has also boosted spending around mining sites, like developing water treatment plants in Madagascar. Rio has submitted a bid to increase its stake in Turquoise Hill Resources too.
On April 11, Goldman Sachs analyst Geydar Mamedov upgraded Rio Tinto Group (NYSE:RIO) stock to Buy from Neutral and raised the price target to GBP 7,300 from GBP 5,460, noting the favorable mix of iron ore and base metals as one of the reasons behind the bullish outlook.
Among the hedge funds being tracked by Insider Monkey, Washington-based investment firm Fisher Asset Management is a leading shareholder in Rio Tinto Group (NYSE:RIO) with 13.5 million shares worth more than $907 million.
6. Wheaton Precious Metals Corp. (NYSE:WPM)
Number of Hedge Fund Holders: 24
Wheaton Precious Metals Corp. (NYSE:WPM) is a Canada-based firm that sells precious metals. The company has a solid dividend history stretching back close to one decade. In the past six years, these payouts have been growing consistently. On March 10, the firm declared a quarterly dividend of $0.15 per share, in line with previous. The forward yield was 1.22%. In early February, the company had entered into an agreement with Sabina Gold & Silver for a gold stream from the Goose Project in Nunavut.
On April 19, KeyBanc analyst Adam Josephson maintained an Overweight rating on Wheaton Precious Metals Corp. (NYSE:WPM) stock and raised the price target to $56 from $46, citing higher commodity prices as one of the reasons behind the target raise.
At the end of the fourth quarter of 2021, 24 hedge funds in the database of Insider Monkey held stakes worth $490 million in Wheaton Precious Metals Corp. (NYSE:WPM), compared to 27 in the previous quarter worth $347 million.
In addition to Newmont Corporation (NYSE:NEM), Barrick Gold Corporation (NYSE:GOLD), and Freeport-McMoRan Inc. (NYSE:FCX), Wheaton Precious Metals Corp. (NYSE:WPM) is one of the stocks that elite investors are monitoring as interest rates rise.
5. Franco-Nevada Corporation (NYSE:FNV)
Number of Hedge Fund Holders: 29
Franco-Nevada Corporation (NYSE:FNV) is a gold-focused royalty and streaming company. The firm has an impressive dividend history stretching back thirteen years. In the past two years, the payouts have grown consistently. In late January, the firm declared a quarterly dividend of $0.32 per share, an increase of close to 7% from the previous dividend of $0.30 per share. In earnings results for the fourth quarter of 2021, the company beat market expectations on earnings per share and revenue by $0.44 and $10 million, respectively.
On April 11, investment advisory BMO Capital maintained an Outperform rating on Franco-Nevada Corporation (NYSE:FNV) stock and raised the price target to C$205 from C$194. Analyst Jackie Przybylowski issued the ratings update.
At the end of the fourth quarter of 2021, 29 hedge funds in the database of Insider Monkey held stakes worth $1 billion in Franco-Nevada Corporation (NYSE:FNV), up from 26 in the preceding quarter worth $951 million.
4. Kinross Gold Corporation (NYSE:KGC)
Number of Hedge Fund Holders: 31
Kinross Gold Corporation (NYSE:KGC) acquires, explores, develops gold properties. On April 5, the company announced that it had agreed to sell all of its Russian assets to mining firm Highland Gold Mining in a deal worth $680 million. The latter is one of the largest gold mining firms in Russia. The deal is reportedly the first complete sale of the assets of a Western firm in Russia since the start of the Ukraine war. The shares of the firm had fallen in the wake of the war but have risen since it announced the sale of the assets.
On March 9, BMO Capital Jefferies analyst Christopher LaFemina kept a Hold rating on Kinross Gold Corporation (NYSE:KGC) stock and raised the price target to $6 from $5.5, predicting that greater geopolitical risk will delay a supply response to high prices in the metals sector in the coming months.
At the end of the fourth quarter of 2021, 31 hedge funds in the database of Insider Monkey held stakes worth $365 million in Kinross Gold Corporation (NYSE:KGC), up from 27 in the previous quarter worth $321 million.
3. Newmont Corporation (NYSE:NEM)
Number of Hedge Fund Holders: 45
Newmont Corporation (NYSE:NEM) produces and explores for gold. On March 17, the company announced that it had won approvals from the state and local authorities for the Coffee Gold Project. Nearly 9 million metric tons of ore will be extracted on an annual basis from the project. The probable mineral reserves from the project are estimated at 46.4 million tons grading 1.45 g/t gold, containing 2.15 million oz of gold. On April 12, the company had agreed to acquire a larger stake in Yanacocha, the largest gold mine in South America, in a deal worth $48 million.
On February 28, Bank of America analyst Michael Jalonen kept a Buy rating on Newmont Corporation (NYSE:NEM) stock and raised the price target to $75 from $70, appreciating that the capital allocation priorities of the firm remained intact.
At the end of the fourth quarter of 2021, 45 hedge funds in the database of Insider Monkey held stakes worth $1.3 billion in Newmont Corporation (NYSE:NEM), compared to 48 in the preceding quarter worth $774 million.
In its Q3 2021 investor letter, First Eagle Investment Management, an asset management firm, highlighted a few stocks and Newmont Corporation (NYSE:NEM) was one of them. Here is what the fund said:
“The largest gold miner in the world, Newmont Corporation (NYSE:NEM) shares lost ground in what was a volatile and ultimately down quarter for the price of gold. The Colorado-based company has continued to execute well in what has been a challenging environment. The company recently reaffirmed its full-year 2021 production guidance, but indicated that it was likely to come in at the mid to low point of the range provided as a result of disruptions from Covid-19 as well as severe weather events. It also noted that inflation pressures were likely to push its costs higher in 2021. None of this changes our opinion of the stock, which has historically offered steady production anchored in good jurisdictions, a good pipeline of organic projects, a strong balance sheet and proven management.”
2. Barrick Gold Corporation (NYSE:GOLD)
Number of Hedge Fund Holders: 46
Barrick Gold Corporation (NYSE:GOLD) is a mining firm with prime interests in gold and copper. On April 13, the company announced that it would be investing close to $7 billion into the Reko Diq project in Pakistan over two phases. The Reko Diq contains the largest undeveloped copper and gold deposits in the world. Barrick expects to start production at the mines within the next five to six years. The project had been on hold since 2011 but was recently restarted after an agreement between the provincial and federal governments in Pakistan.
On March 9, Jefferies analyst Christopher LaFemina maintained a Hold rating on Barrick Gold Corporation (NYSE:GOLD) stock and raised the price target to $24 from $23, noting that there was increased conviction around the multi-year bull market for mining.
At the end of the fourth quarter of 2021, 46 hedge funds in the database of Insider Monkey held stakes worth $958 million in Barrick Gold Corporation (NYSE:GOLD), up from 41 the preceding quarter worth $917 million.
In its Q1 2022 investor letter, ClearBridge Investments, an asset management firm, highlighted a few stocks and Barrick Gold Corporation (NYSE:GOLD) was one of them. Here is what the fund said:
“Also within the structural bucket, we have selectively added to our commodity exposure with the purchase of Barrick Gold Corporation (NYSE:GOLD). Canadian mining company Barrick Gold is a play on operating improvements. The company has aggressively delevered its balance sheet and reduced capex spending to a lower level more permanently, directing its healthy free cash flow to dividends and buybacks.”
1. Freeport-McMoRan Inc. (NYSE:FCX)
Number of Hedge Fund Holders: 66
Freeport-McMoRan Inc. (NYSE:FCX) is an Arizona-based minerals and mining firm. On April 21, the company posted earnings for the first quarter of 2022, reporting earnings per share of $1.07, beating estimates by $0.15. The revenue over the period was $6.6 billion, up more than 36% year-on-year and beating expectations by $310 million. The firm expects to sell 4.25 billion pounds of copper, 1.6 million ounces of gold and 80 million pounds of molybdenum in fiscal year 2022, with capital expenditures during the time estimated at around $4.6 billion.
On April 5, Deutsche Bank analyst Abhi Agarwal kept a Hold rating on Freeport-McMoRan Inc. (NYSE:FCX) stock and raised the price target to $50 from $42, identifying increased copper price futures as one of the main reasons behind the target raise.
At the end of the fourth quarter of 2021, 66 hedge funds in the database of Insider Monkey held stakes worth $3.7 billion in Freeport-McMoRan Inc. (NYSE: FCX), the same as in the preceding quarter worth $3.2 billion.
In its Q4 2021 investor letter, Horizon Kinetics LLC, an asset management firm, highlighted a few stocks and Freeport-McMoRan Inc. (NYSE:FCX) was one of them. Here is what the fund said:
“Those were some ideas about copper demand. Here are some specifics about supply. Global copper mine production in the 10 years from 2005 to 2015 rose 2.45% annually. In the next 5 years, to 2020, it increased by only 0.9% annually. Even ignoring the 2020 pandemic year, for the 4 years from to 2019, the expansion rate was 1.66%. We already have the historical context for this: the commodity price collapse prior to 2015, from a position of excess capacity.
What producers must do in that situation, because they have high fixed costs and debt expense, is curtail their exploration and development expenditures and reduce operating costs. They rely on existing mines, instead, and on their highest-grade ores and lowest-cost production. They might not actually reduce current production, but they aren’t replacing the reserves that are being slowly drawn down. You can see this at work at the individual company level.
Freeport-McMoRan Inc. (NYSE:FCX) will illustrate. It is the world’s third-largest copper producer, closely following Chile’s Codelco and Australia’s BHP Group. In 2014, even though Freeport sold more copper than the prior year, its revenues dropped by over 25%, and it went from $4.8 billion of operating earnings (a 22% margin) to a $(0.2) billion loss. The company’s capital expenditures peaked in 2014 at $3.86 billion and will be about $1.72 billion in 2021, meaning the company is spending 55% less now than it was seven years ago. In inflation-adjusted terms, it’s spending 61% less today than seven years ago…” (Click here to see the full text)
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Disclosure. None. 10 Best Gold Stocks to Buy for Inflation is originally published on Insider Monkey.
