In this article we discuss the 5 best gold stocks to buy in 2021. If you want to read our detailed analysis of the gold mining industry, go directly to the 10 Best Gold Stocks to Buy in 2021.
5. Barrick Gold Corporation (NYSE: GOLD)
No. of Hedge Fund Holders: 22
This is a gold mining company that also deals with the development of gold mines, as well as selling precious metal. It also deals with copper production and has investments in the Canadian oil and gas industry. First Eagle Investment Management, held by Jean-Marie Eveillard was its largest hedge fund investor with more than 26.8 million shares.
- Barrick Gold recently signed an agreement that would allow Papua New Guinea to have majority shareholding in Porgera gold mine, scheduled to resume operations.
- PNG stakeholders will own 51% of the Porgera mine, while Barrick Niugini Ltd will own the remaining stake.
- James Marape, the Prime Minister of Papua New Guinea, revealed that the deal will help set the pace for other projects in the region.
- Barrick’s weak stock price performance has been viewed as a strong buy opportunity for investors, especially considering the new deal.
Here is what GoodHaven Capital Management has to say about Barrick Gold Corporation in their Q4 2020 investor letter:
“Barrick’s recent results have been consistent with our expectations. Barrick has begun inching up the dividend as planned, which should continue increasing absent them finding a large acquisition (they want more copper assets) or a materially lower price of gold. We’d also expect periodic special dividends during stronger gold price environments. At current gold prices we estimate normalized free cash flow at Barrick of over $1.60/share. The company is now about net-debt free. We see plenty of upside and absent a collapse in gold not too much downside. Missing from much of the public discussions about gold, but potentially interesting, is the supply/demand backdrop. As the Wall Street Journal (8/16/20) recently said “gold is amongst the rarest metals in the earth’s crust and much of the easier to get to ore has already been mined. What is left is harder to find and more expensive to extract…” According to the World Platinum Council, it was forecasted that there will be a supply and demand imbalance of 1.2 million ounces globally. The potential macro tailwinds that could add value to an alternate currency like gold including currency concerns, excessive debt and continuing negative real interest rates are still out there. While the shares performed well for the year they were weak in the second half and now stand more attractively priced.”
4. Kinross Gold Corporation (NYSE: KGC)
No. of Hedge Fund Holders: 36
The Toronto-based mining company operates silver and gold mines in Mauritania, Ghana, Chile, Ecuador, Brazil, Russia, Canada, and the U.S. Jim Simons’ Renaissance Technologies was one of its top investors with over 38 million shares. Kinross reported that it produced roughly 624k ounces of gold in Q4 2020 and 2.4 million ounces for the entire year. The company issued a dividend of US$0.03 per common share for Q4 2020.
- The company’s production cost of sales per equivalent ounce in Q4 was $682 per equivalent ounce of gold and $723 equivalent ounces for the full year.
- Kinross had 30 million gold ounces in mineral reserves in 2020, representing an increase of 5.7 million ounces of gold, equivalent to 23% YoY gain.
- The company is currently developing various projects, including Tasiast 24k, Udinsk, Fort Knox Gilmore, and Peak. It commenced pre-stripping at the La Coipa mine earlier this year, with production set to commence next year, and a feasibility study is ongoing at Lobo-Marte. In 2020, Kinross made progress in advancing high-quality and diversified project pipeline, also adding 5.7 million gold ounces to its mineral reserve estimates after depletion.
3. Newmont Corporation (NYSE: NEM)
No. of Hedge Fund Holders: 50
This is a Newmont-based company that gold production operations in Mexico, Ghana, Canada, New Zealand, Indonesia, Peru, Australia, and the U.S. The company also deals with copper production in Australia and Indonesia. Hedge fund owner Bronte Capital held by John Hempton own 131,430 Newmont shares, making it one of the leading investors that owned the stock.
- Newmont revealed that its free cash flow reached record levels at $3.6 billion in Q4 2020. The company registered an impressive performance during the quarter courtesy of lower capital expenditures on account of coronavirus-related disruptions and higher metal prices.
- The gold mining company is expected to achieve better margins in FY2021 and FY2022 even as all-in-costs fall below the industry average and also if gold prices remain flat.
- Newmont recently increased its dividend by 38% with a 3.4% yield. It also managed to reduce its cost of gold production so that it will be lower than it was in the previous year.
- The company announced that drawn balances will result in positive and negative price adjustments based on criteria based on sustainability performance. S&P Global and MSCI will independently measure the criteria.
This is what First Eagle Investment Management said about the company in its investor letter:
“Given what we view as a high-quality management team and robust balance sheet, Colorado’s Newmont is a prime example of a miner that was prepared to meet the challenges of Covid19. With rigorous protocols already in place, the company has been proactive in managing its mines to protect local communities and infrastructure while at the same time mitigating the pandemic’s impact on its business. In contrast with broad market trends that have companies cutting or suspending dividend payments, Newmont recently increased its quarterly dividend by 79%.”
2. AngloGold Ashanti Limited (NYSE: AU)
No. of Hedge Fund Holders: 17
This South African-based mining company has mining operations in various parts of Africa, as well as Australia and South American. It is also involved in the development of gold markets and marketing and selling precious metal.
John Paulson’s Paulson & Co was the largest hedge fund investor courtesy of its 5.9 million stake in AngloGold Ashanti.
- AngloGold Ashanti announced earlier this year that it would pay a full-year dividend of 7.05 rand per share, roughly 5 times its dividend payout in 2019.
- The increased dividend payout reflects that the company’s 2020 profit was more than double its profit in the previous year.
- AngloGold plans to boost its production to around 3.2M-3.6M oz. per year by 2025 courtesy of further developments in its existing mines and an increase in production activities at Ghana’s Obuasi mine.
- The company acquired 6M oz. of ore reserves in 2020. Its robust mining portfolio makes it an appealing investment, especially for the long term.
1. Wheaton Precious Metals Corp. (NYSE: WPM)
No. of Hedge Fund Holders: 34
This company purchases precious metals such as gold and silver from mining companies and distributes them to its customers worldwide. Beddow Capital Management managed by Ed Beddow And William Tichy owned 39,195 Wheaton shares, was among the company’s largest hedge fund shareholders.
- Wheaton recently announced the signing of its third deal within 6 months.
- The company will pay $290 million to secure gold from Capstone Mining. The gold will be sourced from the Santo Domingo mine.
- The NPV of the Capstone deal is $25 million or 5%, considering the prevailing gold prices at the time of the deal.
- The company made $286.21 million from its gold stream activities in Q4 2020, representing a 28.2% gain YoY.
- Wheaton announced a dividend of $0.13 per common share on March 11, representing a 30% increase from the previous dividend.
- Wheaton reported 672,600~ gold-equivalent ounces of annual attributable production in Q4 2020.
- The company finished the year on a strong note despite the challenging conditions that led to mining activities being disrupted.
You can also take a peek at 10 Best Silver Stocks To Buy and 10 Best 5G Stocks To Buy Now.
