We recently compiled a list of the 10 Best Gold Stocks to Buy According to Reddit and Robinhood. In this article, we are going to take a look at where Royal Gold, Inc. (NASDAQ:RGLD) stands against the other gold stocks.
Regarded as a safe investment option, hedging investors against inflation, Gold has been a highly demanded precious metal historically. As such, in 2023, the precious metal’s demand soared by 3% year-over-year (YoY), hitting the 4,899 tons mark. This is on the back of growing demand from emerging markets like India and China, who were responsible for 75% of this demand. This ever-increasing trajectory of demand is expected to continue in the current year as well which is going to be discussed below.
Amidst the inflationary state in the U.S. for the past while, and the resulting uncertainty in the market, gold has seen its prices rise in 2023, reaching its all-time high, on the back of 13% increase. The increase in demand mainly came from central banks, the industrial sector, and investors. A trend was also observed in 2023, wherein the global sovereign wealth funds were reported to be increasing their holdings in the precious metal.
The price of gold is a complex mechanism, as it is impacted by several factors like demand, market stability, and interest rates, to name a few. Nevertheless, several analysts are looking to a positive future for gold, as they expect the prices to be sitting somewhere between $2,421.00 and $2,651.00 (per ounce rate) by the current year end, as compared to its current price of $2374.31, as of writing this article.
This trend is also shaping up on the back of the Fed’s plans for a rate cut later in the year, as the gold prices usually have an inverse relationship with the market interest rate. As such, the rate cut that is expected to occur somewhere in September is also helping analysts forecast the precious metal’s price increase in 2024.
Following is what was spoken about the gold market by an analyst at PrimeXBT, Kathryn Davies, in June 2024:
“Gold has fallen from its all-time high of $2,222 after the SNB cut rates, boosting the USD. However, the gold price remains supported by the prospect of Federal Reserve rate cuts and a lower interest rate environment globally. Elevated geopolitical tensions and central bank purchases also keep demand high, and the price supported. As a result, Gold could see more all-time highs as we progress through 2024, rising to $2400 by the year’s end.”
In terms of the global market, China is a crucial player in the gold market – China is not only the largest producer of gold (producing 12% of gold in 2023), but also the largest consumer of gold, with its central bank, on its own, buying 225 tons of gold in 2023, up from 62 tons in the previous year. Analysts have attributed China’s massive buying of gold to the freezing of Russian assets by the U.S. and its allies, which China is attempting to hedge itself from by buying Gold – pushing up the gold prices by doing so.
Australia and Russia closely follow China in the gold production game; in 2023, China, Russia, and Australia recorded a gold production volume of 375 tons, 325 tons, and 314 tons, respectively. The U.S. was placed 5th on the same list created by Insider Monkey, with a production volume of 173 tons! To date, 209,000 tons of gold have been mined across the globe, equaling a value of massive $12 trillion!
Having discussed the expected future of gold prices, it’s time we explore the world of gold stocks, which directly correlate with the gold price trajectory. Thus, let’s now jump to our list of 10 Best Gold Stocks to Buy According to Reddit and Robinhood.
Methodology
Extensive research across the Reddit discussion forums, along with the Robinhood Index, helped us in curating our preliminary list of all the stocks discussed across the two sources. Based on the analysts’ sentiment regarding each stock across both sources, we assigned the Reddit score and Robinhood score to the stocks and ranked them based on the average score, which we will refer to as the Overall score. Lower the score, better the ranking of stock. For stocks with an equal Overall score, we used Reddit score as the tiebreaker.
The overall score was derived from the number of upticks on Reddit forums against the respective stocks, and the number of analysts assigning buy ratings to the respective stocks on Robinhood. We also peeked into Insider Monkey’s database that tracks the activity of 920 hedge funds, wherein we collected information about the hedge fund investors’ holders of all these stocks to reaffirm the respective stocks’ sentiment across the two sources.
Why are we interested in the stocks that hedge funds pile into? The reason is simple: our research has shown that we can outperform the market by imitating the top stock picks of the best hedge funds. Our quarterly newsletter’s strategy selects 14 small-cap and large-cap stocks every quarter and has returned 275% since May 2014, beating its benchmark by 150 percentage points (see more details here).
A mine entrance, showcasing the precious metals and minerals that this company produces.
Royal Gold, Inc. (NASDAQ:RGLD)
Overall Score: 7.5
Reddit Score: 9
Robinhood Score: 6
Number of Hedge Fund Holders: 31
Royal Gold, Inc. is a precious metal streaming company and holds royalty interests in mines located in the U.S., Canada, Australia, and several other countries.
Royal Gold, Inc. (NASDAQ:RGLD) is one of the best gold stocks according to Reddit and Robinhood. The company has kept on giving out dividends for the past 23 years, with dividend increasing every year! Also, the stock boasts a dividend yield of 1.23%! In Q1 2024, the company gave out a dividend of $0.4 per share, which was a 7% increase from the previous quarter.
The revenue for the company’s gold segment was up by 10%, even though the overall revenue was down 13% to the quarter a year ago, which itself was the highest revenue-generating quarter of the company’s history; this change was associated with an increase in gold prices which were up by 10% in the quarter, along with a reduction in contributions of few mines like Mount Milligan, Pueblo Viejo and the Cortez legacy zone, to name a few. On the other hand, the company recorded its best quarterly operating cash flow, amounting to $138 million, which was a 27% increase over the previous year’s same quarter, attributed to payment received as per cost support agreement with Mount Milligan, and capitalized interest received from the loan facility repayment.
Interestingly, the stock has its price already going in an upward trajectory not only on YTD basis (15.65%), but also in the last one month, in which it has gained a sweet 15.4%. This is on the back of analysts’ estimates that the company’s EPS is going to go up by 28.1% in 2024 to $4.65 per share from $3.63 in 2023, and revenue is going to go up by 25.1% to $785.37 million in 2025 from forecasted $627.63 million in 2024. These projections can be attributed to the company’s new ventures opening up at Mara Rosa in Brazil and Cote Gold in Ontario, wherein the first batch of gold production was off and running. The new Goldrush mine at Cortez is also underway, expecting to give out an initial ramp-up production of 130,000 ounces in 2024, eventually expected to reach 400,000 by 2028.
Analysts view the stock quite highly as well, as they have set a price target of $152, whereas their current price sits at $130.62, as of writing this article – that’s an upside potential of 16.37%! As such, 31 hedge fund holders hold a stake in the stock, worth $321 million!
Furthermore, the Q2 production is rolling as the gold production increased by 2.6%, along with an increase in realized gold price from $2,070 in Q1 2024 to $2,339 in Q2 2024. Investors must keep an eye out for the details of the Q2 figures, that are to be disclosed in August 2024, but from what it seems like, the company is on its course to realizing the potential that investors are seeing in the stock.
Overall RGLD ranks 8th on our list of the best gold stocks to buy according to Reddit and Robinhood. You can visit 10 Best Gold Stocks to Buy According to Reddit and Robinhood to see the other gold stocks that are on hedge funds’ radar. While we acknowledge the potential of RGLD as an investment, our conviction lies in the belief that AI stocks hold greater promise for delivering higher returns and doing so within a shorter timeframe. If you are looking for an AI stock that is more promising than RGLD but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.
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Disclosure: None. This article is originally published at Insider Monkey.