10 Best Gold Stocks to Buy for Portfolio Diversification

In this article, we will be taking a look at the 10 best gold stocks to buy for portfolio diversification.

When the rest of the market is going through turmoil, gold is an asset that continues to survive. The asset is considered to be one of the best investments to hedge against inflation in the long run. In light of this, it is important for any good portfolio to have at least a few gold stocks to provide extra protection in economically volatile times.

The price of gold has been rallying since November, when it stood at $1600 per ounce. By March, the price had risen to $1836 per ounce, and by April 27, it has risen even further to reach $1980 per ounce.  Such price rises contribute to the success of several gold companies, such as Barrick Gold Corporation (NYSE:GOLD), Newmont Corporation (NYSE:NEM), and Kinross Gold Corporation (NYSE:KGC).

Gold Outlook 2023

According to a report by the World Gold Council published in December, 2023 brings both headwinds and tailwinds for gold. However, at the end of it all, the report continues to believe there is a positive outlook for gold in 2023. History seems to have shown us that in times of mild recession and weaker earnings, gold tends to do well. According to the report, in five out of the past seven recessions, gold has performed well.

Many investors are piling into gold as an investment, especially because most people think that inflation is not going anywhere anytime soon. This belief was translated into a near-record level high for gold by mid-April, when the price of the asset rose to $2055.3 per ounce on April 13. This hike represented an increase of about 13% year-over-year at the time. As evidenced by the price of gold on April 27, quoted above, the figure has since fallen, but it remains high nonetheless. This fluctuation in the price of gold merely goes to show investor attitudes towards the asset in light of fears that inflation may just be here to stay.

Let’s now take a look at the 10 best gold stocks to buy for portfolio diversification.

Our Methodology

To select gold stocks for our list below, we gathered the top gold stocks based on hedge fund sentiment by using Insider Monkey’s hedge fund data for the fourth quarter. We ranked these stocks based on the number of hedge funds holding stakes in them, from the lowest to the highest number.

Best Gold Stocks to Buy for Portfolio Diversification

10. Osisko Gold Royalties Ltd (NYSE:OR)

Number of Hedge Fund Holders: 18

Osisko Gold Royalties Ltd (NYSE:OR) is a gold company working to acquire and manage precious metals and other royalties, streams, and interests. It is based in Montreal, Canada.

Analysts at Stifel hold a Buy rating on Osisko Gold Royalties Ltd (NYSE:OR) shares as of April 20.

Analysts on Wall Street have placed an average price target of $18.76 on Osisko Gold Royalties Ltd (NYSE:OR) shares, which were trading at $16.1 on April 27. This gives the shares an upside potential of 16.23%. Osisko Gold Royalties Ltd (NYSE:OR) is also considered a Strong Buy on Wall Street, having seven Buy ratings and two Hold ratings placed on it.

Sprott Asset Management was the largest shareholder in the company at the end of the fourth quarter, holding 3.5 million shares. There were 18 hedge funds long the stock, with a total stake value of $153 million.

Palm Valley Capital Management, an investment management firm, mentioned Osisko Gold Royalties Ltd (NYSE:OR) in its first-quarter 2023 investor letter. Here’s what the firm said:

“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.”

Osisko Gold Royalties Ltd (NYSE:OR), like Barrick Gold Corporation (NYSE:GOLD), Newmont Corporation (NYSE:NEM), and Kinross Gold Corporation (NYSE:KGC), is a gold company many elite hedge funds are interested in today.

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

Number of Hedge Fund Holders: 22

Royal Gold, Inc. (NASDAQ:RGLD) manages precious metal streams, royalties and interests, particularly in gold, silver, copper, and other metals. It is based in Denver, Colorado.

Matthew Murphy, an analyst at Barclays, holds an Equal Weight rating on Royal Gold, Inc. (NASDAQ:RGLD) shares as of April 21.

In the fourth quarter, Royal Gold, Inc. (NASDAQ:RGLD) generated revenues of $162.98 million, beating analyst estimates by $7.95 million. Wall Street analysts have placed an average price target of $137.25 on the shares. Royal Gold, Inc. (NASDAQ:RGLD) was trading at $133.48 on April 27, so the price target indicates that the stock has an upside potential of 3.11%.

Royal Gold, Inc. (NASDAQ:RGLD) was found among the 13F holdings of 22 hedge funds in the fourth quarter. Their total stake value was $274 million.

8. Kinross Gold Corporation (NYSE:KGC)

Number of Hedge Fund Holders: 24

Kinross Gold Corporation (NYSE:KGC) engages in the acquisition, exploration, and development of gold properties. The company is based in Toronto, Canada.

National Bank’s Mike Parkin holds an Outperform rating on Kinross Gold Corporation (NYSE:KGC) shares as of April 18.

Analysts see Kinross Gold Corporation (NYSE:KGC) as a Moderate Buy, as there are five Buy ratings and three Hold ratings on the stock. They have placed an average price target of $5.41 on the shares, with a high forecast of $7.15. Kinross Gold Corporation (NYSE:KGC) was trading at $5 on April 27, so the price target gives the stock an upside potential of 8.2%.

First Eagle Investment Management was the largest shareholder in the company, holding 4.5 million shares. In total, there were 24 hedge funds long Kinross Gold Corporation (NYSE:KGC), with a total stake value of $268 million.

7. Franco-Nevada Corporation (NYSE:FNV)

Number of Hedge Fund Holders: 27

Franco-Nevada Corporation (NYSE:FNV) is a gold-focused royalty and streaming company. It is based in Toronto, Canada.

Carey MacRury, an analyst at Canaccord, holds a Buy rating on Franco-Nevada Corporation (NYSE:FNV) shares as of March 10.

Franco-Nevada Corporation (NYSE:FNV) generated revenues of $320.4 million in the fourth quarter, beating estimates by $12.52 million. Analysts have placed an average price target of $163.44 on the shares, which were trading at $151.33 on April 27. This gives Franco-Nevada Corporation (NYSE:FNV) an upside potential of 7.88%.

Our hedge fund data shows 27 funds long Franco-Nevada Corporation (NYSE:FNV) in the fourth quarter. Their total stake value was $841 million.

Horizon Kinetics, an investment management company, mentioned Franco-Nevada Corporation (NYSE:FNV) in its third-quarter 2022 investor letter. Here’s what the firm said:

“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 nearsole source of revenues unchanged. What will Franco Nevada’s earnings and share price do if gold rises over the course of a decade?”

6. Alamos Gold Inc. (NYSE:AGI)

Number of Hedge Fund Holders: 28

Alamos Gold Inc. (NYSE:AGI) acquires, explores, develops, and extracts precious metals, mostly gold and silver. It is based in Toronto, Canada.

On April 24, Ovais Habib, an analyst at Scotiabank, resumed coverage of Alamos Gold Inc. (NYSE:AGI) shares with an Outperform rating.

An average price target of $14.68 has been placed on Alamos Gold Inc. (NYSE:AGI) by analysts on Wall Street. The shares were trading at $12.95 on April 27. This gives Alamos Gold Inc. (NYSE:AGI) an upside potential of 13.32%. Analysts also see the stock as a Moderate Buy, with four Buy ratings and three Hold ratings.

First Eagle Investment Management was the largest shareholder in Alamos Gold Inc. (NYSE:AGI) at the end of the fourth quarter, holding 11.6 million shares. There were 28 hedge funds long the stock in total, with a total stake value of $253 million.

Palm Valley Capital Management, an investment management firm, mentioned Alamos Gold Inc. (NYSE:AGI) in its fourth-quarter 2022 investor letter. Here’s what the firm said:

“For the full calendar year, the Fund’s top performers were Coterra Energy (ticker: CTRA), Amdocs, and Alamos Gold Inc. (NYSE:AGI). Coterra’s stock rose sharply along with energy prices at the beginning of 2022. Amdocs delivered record operating results during the year and demonstrated the strength of its market position serving the world’s leading communication service providers. All the Fund’s precious metals holdings, led by Alamos, contributed positively to performance in 2022, with a 1% collective contribution from gold and silver equities. We think this was a good outcome relative to gold and silver prices that ended the year essentially flat, after a summer swoon. Additionally, precious metals miners were down, on average, in 2022.”

Alamos Gold Inc. (NYSE:AGI), like Barrick Gold Corporation (NYSE:GOLD), Newmont Corporation (NYSE:NEM), and Kinross Gold Corporation (NYSE:KGC), is a highly profitable gold stock with immense upside potential.

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

Number of Hedge Fund Holders: 28

Wheaton Precious Metals Corp. (NYSE:WPM) sells precious metals, primarily gold, silver, palladium, and cobalt. It is based in Vancouver, Canada.

Ingrid Rico, an analyst at Stifel, holds a Buy rating on Wheaton Precious Metals Corp. (NYSE:WPM) shares as of April 20.

In the fourth quarter, Wheaton Precious Metals Corp. (NYSE:WPM) generated revenues of $236.05 million, beating the previous quarter’s revenues of $218.84 million. With 10 Buy ratings and two Hold ratings placed on the stock, analysts on Wall Street consider it a Strong Buy.

Out of the 943 hedge funds tracked by Insider Monkey in the fourth quarter, 28 hedge funds were long Wheaton Precious Metals Corp. (NYSE:WPM). Their total stake value was $672 million.

4. Rio Tinto Group (NYSE:RIO)

Number of Hedge Fund Holders: 29

Rio Tinto Group (NYSE:RIO) explores, mines, and processes mineral resources, including gold, diamonds, and copper. It is based in London, United Kingdom.

On March 30, Richard Hatch at Berenberg reiterated a Buy rating on Rio Tinto Group (NYSE:RIO) shares.

An average price target of $95.64 has been placed on Rio Tinto Group (NYSE:RIO) shares by analysts on Wall Street. The shares were trading at $63.29 on April 27. This gives the stock an upside potential of 51.21%.

There were 29 hedge funds long Rio Tinto Group (NYSE:RIO) in the fourth quarter, with a total stake value of $2.6 billion.

3. Barrick Gold Corporation (NYSE:GOLD)

Number of Hedge Fund Holders: 40

Barrick Gold Corporation (NYSE:GOLD) explores, produces, and sells gold and copper properties. The company is based in Toronto, Canada.

Analysts at Barclays hold an Overweight rating on Barrick Gold Corporation (NYSE:GOLD) shares as of April 21.

With seven Buy ratings and four Hold ratings placed on Barrick Gold Corporation (NYSE:GOLD), analysts consider the stock to be a Moderate Buy. They have placed an average price target of $22.73 on the shares, which were trading at $19.07 on April 27. This gives them an upside potential of 19.25%.

Barrick Gold Corporation (NYSE:GOLD) had 40 hedge funds long its stock in the fourth quarter, with a total stake value of $721 million.

Old West Management, an investment management company, mentioned Barrick Gold Corporation (NYSE:GOLD) in its fourth-quarter 2022 investor letter. Here’s what the firm said:

“Barrick Gold Corporation (NYSE:GOLD) is the second largest gold miner in the world, with operations in the U.S., Canada, Africa, South America and more. Barrick is also a major copper producer. Former Goldman Sachs executive John Thornton took control of the company in 2012 and quickly realized he wanted someone with a mining background to run the company. Mark Bristow, at that time CEO of Randgold, was considered one of the best gold mining executives in the world. Thornton wanted Bristow so badly Barrick bought Randgold in 2018. Bristow who is South African, had extensive experience operating mines throughout Africa, and in fact would fly his own single engine plane to visit mines. He has his PhD in Geology, and he has flourished running Barrick the past five years.

Barrick is estimated to have $1.6 billion of net income this year on $11.5 billion of revenue. Net Income has been growing 15% per year. The stock trades at $19.00 per share which is 16 times forward earnings, and the stock has a 3.15% dividend yield. Barrick has a fortress balance sheet with $5.7 billion in cash and $5 billion of long term debt, which is only one time EBITDA”

2. Agnico Eagle Mines Limited (NYSE:AEM)

Number of Hedge Fund Holders: 41

Agnico Eagle Mines Limited (NYSE:AEM) explores, develops, and produces mineral properties, primarily gold deposits. It is based in Toronto, Canada.

An Overweight rating was reiterated on Agnico Eagle Mines Limited (NYSE:AEM) on April 21 by Matthew Murphy at Barclays.

Agnico Eagle Mines Limited (NYSE:AEM) generated revenues of $1.38 billion in the fourth quarter. This represented an increase of 45.9%. The company’s EPS for the quarter was $0.41, in line with estimates.

A total of 41 hedge funds were long Agnico Eagle Mines Limited (NYSE:AEM) in the fourth quarter. Their total stake value was $613 million.

Old West Management, an investment management company, mentioned Agnico Eagle Mines Limited (NYSE:AEM) in its fourth-quarter 2022 investor letter. Here’s what the firm said:

“Agnico Eagle Mines Limited (NYSE:AEM) is the third largest gold miner in the world with mines in Canada, Australia, Finland, and Mexico. Although we have long respected the company, we became shareholders when they acquired our portfolio holding, Kirkland Lake Gold. Agnico chairman Sean Boyd is one of the most respected executives in the mining industry. He was appointed CEO in 1998 and was recently appointed Executive Chairman. Boyd is a large shareholder and perfectly fits our owner/manager role. This year the company is projected to make nearly $1 billion in net income on $5.8 billion in revenue with $758 million of free cash flow. Net income has been growing 15% per year for several years. Agnico has a fortress balance sheet with $1.3 billion of long term debt, which is only 2 times EBITDA, and $820 million cash in the bank. The stock trades at $55 per share, which is 26 times earnings with a 2.9% dividend yield.”

1. Newmont Corporation (NYSE:NEM)

Number of Hedge Fund Holders: 50

Newmont Corporation (NYSE:NEM) produces and explores gold. It is based in Denver, Colorado.

Mike Parkin, an analyst at National Bank, holds an Outperform rating on Newmont Corporation (NYSE:NEM) shares as of April 18.

The average price target placed on Newmont Corporation (NYSE:NEM) shares by analysts on Wall Street is $58.06, with a high forecast of $67. The shares were trading at $47.94 on April 27. This gives them an upside potential of 21.13%.

Newmont Corporation (NYSE:NEM) was found among the 13F holdings of 50 hedge funds in the fourth quarter, with a total stake value of $991 million.

See also Top 15 Gold Producing Countries in the World and 12 Most Profitable Gold Stocks.

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Disclosure: None. 10 Best Gold Stocks to Buy for Portfolio Diversification is originally published on Insider Monkey.