In this article, we will take a detailed look at the 12 Best Precious Metals Stocks to Invest in Now. For a quick overview of such stocks, read our article 5 Best Precious Metals Stocks to Invest In Now.
Precious metals are in the spotlight amid rising geopolitical tensions in the Middle East and burgeoning demand for gold in China and India. Gold is surging to new highs despite expectations that the Federal Reserve will have to decrease its target number of rate cuts this year or altogether postpone rate cut plans amid a stubborn inflation and strong jobs market. But precious metals investors are facing a quandary: despite seeing no major inflows in gold ETFs like iShares Gold Trust Micro (IAUM) and SPDR Gold MiniShares Trust (GLDM), gold futures are continuing to fly high. What’s pushing gold prices in 2024? One explanation given by many experts is the possible demand from China, where people are buying gold to protect their investments amid a decline in the real estate industry. A Wall Street Journal report recently quoted Chris Mancini, Associate Portfolio Manager of The Gabelli Gold Fund (GOLDX), who said that the current demand of gold is coming from physical buyers of the precious metal in China.
Precious Metals Outlook in 2024: Bear and Bull Cases
Metals trading company MKS PAMP in its precious metals outlook report for 2024 had already pointed to possible challenges for the Federal Reserve in meeting its inflation goals this year. The report said that the biggest risk was a rebound in inflation which could result in a “higher for longer” scenario. However, given the expectations of rate cuts in the first half of the year, the report gave a rosy outlook for gold and said its average price target for gold as a base case was $2050 per ounce — compare this to the latest gold price of $2340 per ounce as of April 13, and you start to get why analysts are having a hard time understanding gold price jumps this year. The MKS report said that the probability of this scenario was 50%, and said this would realize in case of a “slow landing” where the Fed would start cutting rates in the first half of 2024. But since this scenario is not expected to materialize because of the Fed’s possible change of plans, what’s the bearish case for gold? The MKS report said that if we are in for a higher for longer scenario (seems likely as of now), and gold demand from Asia remains weak (the opposite is true), the average price of gold would be $1600 per ounce.
Germany-based Heraeus also said in its outlook for precious metals earlier this year that interest rates would define the trajectory of precious metals this year, with the firm expecting gold price to remain in between$1,880/oz and $2,250/oz.
Outlook for Silver in 2024
While silver roughly follows the path of gold when it comes to broader price movements on the back of macroeconomic news, the fact that silver is widely used in the industry in addition to being treated as a safe-haven asset makes it an interesting play. For example, the Heraeus report said that silver’s use in solar photovoltaics (PV) is still growing and the firm expects that photovoltaic silver demand could hit ~190 moz this year, driven by China’s solar industry.
A Strong Buying Opportunity for Gold Investors
While gold price jumps this year have puzzled analysts, many believe any correction in the precious metal’s price would create a new buying opportunity for investors since geopolitical tensions in the Middle East, Russia-Ukraine war and the upcoming elections in the US will act as catalysts. A latest Bloomberg report quoted Philip Newman, managing director at consultancy Metals Focus, who said that the gold market has become “overextended” that could lead to “liquidation selling.” However, the analyst said these liquidations could create a “very strong buying opportunity.”
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Performance of Precious Metals Stocks
While SPDR Gold Trust (NYSEARCA:GLD) is up about 13% so far this year, what does the performance of precious metals-focused ETFs look like? iShares MSCI Global Gold Miners ETF (NASDAQ:RING) is up 11% this year, compared to the S&P 500’s gain of about 8%. Over the past one year, RING is down 2%, compared to the broader market’s gains of 23%. Some of the top holdings of the ETF include Newmont Corporation (NYSE:NEM), Barrick Gold Corp (NYSE:GOLD) and Agnico Eagle Mines Ltd (Ontario) (NYSE:AEM).
For this article we scanned Insider Monkey’s database of 933 hedge funds and their stock holdings and chose 12 precious metals stocks with the highest number of hedge fund investors. Why do we pay attention to hedge fund sentiment? Hedge funds’ top 10 consensus stock picks outperformed the S&P 500 Index by more…