In this piece, we will take a look at the 11 best Canadian gold stocks to buy now. If you want to skip our introduction to the gold mining industry and what's happening in the global gold markets right now, then check out 5 Best Canadian Gold Stocks To Buy Now.
Gold is one of the oldest forms of currency in the world. The metal's physical characteristics combined with its relative rarity have made it a financial instrument, and even though gold is not used as a currency anymore, it is still used by central banks and investors as an alternative to the ultimate safe haven currency, the U.S. dollar.
The recent turmoil in the financial world has also pushed gold to the spotlight of sorts. The price of gold is actually quite volatile, and it often fluctuates in response to investor sentiment about the dollar's prospects measured through the dollar index (DXY). This is an index of the dollar against major world currencies, and some reasons behind the upward movement in the dollar index include global economic sentiment and interest rate policies. Should investors perceive that the global economy is poised to slow down, for example, due to war in the Middle East affecting oil supplies, then the dollar rises as capital moves away from risky assets to the greenback. Similarly, should central banks of other developed economies and regions such as the U.K. and the European Union fail to ratchet interest rates to similar levels as the U.S. Federal Reserve, then the dollar index also appreciates.
Generally, when the dollar rises, gold falls, particularly in a high rate environment. This is because while gold is nevertheless a safe haven asset, holding gold does not provide the cushion and safety of interest rates. So holding gold provides return only in the form of potential price appreciation, while holding the dollar in bank accounts or other securities also provides interest payments.
Additionally, the high interest rate in America coupled with the rapid pace of hikes has spurred central banks to diversify their holdings. Central banks typically hold currency and assets in order to back their issuing currency, and recent trends suggest that gold's fortunes in central bankers' treasure chests are on the uptick. Looking at data compiled by the World Gold Council, central banks were net buyers of gold for 15 months out of the 20 months between January 2022 and August 2023. Central banks buy gold for a variety of reasons, and some of these include hedging against fiat currencies and balancing out their foreign exchange reserves. Within the central bank list, Russia and China are some of the most aggressive buyers of gold, and the broader banker sentiment around gold is influenced by the state of the global economy and the expectations surrounding its future direction. One key reason why the Russian central bank buys significant amounts of gold is that the metal is a financial asset that can easily be moved around without being affected by Western and American sanctions.
Shifting gears to switch our focus on the gold industry, gold companies are currently growing their production as a tough economy increases demand for the metal. Gold is widely seen as a buffer against inflation, a belief that results in self fulfilling prophecy which sees high demand feed into more buying, only to drive the price up further. For some Canadian gold companies, the earnings season is just getting started, and it looks like production is set to increase. Barrick Gold Corporation (NYSE:GOLD) produced one million ounces of gold during its September 2023 quarter, higher than the 988 million ounces that it had produced during Q3 2022. Additionally, cooling global inflation, as economies adjust to the shock from the Russian invasion of Ukraine and tight monetary policy restricts global capital flow, has also led to a reduction in production costs. For Barrick Gold, gold production costs per ounce are lower by at least 6% during Q3 2023 over Q2 2023.
Similarly, Kinross Gold Corporation (NYSE:KGC), due to report its third quarter results on November 8th also ended Q2 2023 on a strong note. During the three months ending in June, the Canadian gold company's production soared by 22% annually, while its operational costs of $1,296 per ounce of gold were slightly lower than Barrick's $1,355 per ounce. For the third quarter, Barrick Gold's gold production costs were $1,255 per ounce which were significantly lower than the Q2 2023 costs and indicate a broader belt easing in the Canadian gold industry.
As a whole, gold is one of Canada's most valuable mined products. According to the Canadian government, $13.7 billion of gold was produced in Canada in 2021 with Ontario and Quebec being the biggest gold mining areas in the country. High demand for gold in the financial industry is also a source of significant demand for Canadian gold as a large portion of its exports go to the U.K. Additionally, the rising gold production by Canadian companies mentioned above is also a trend in the broader market with data showing that gold and silver mining capital expenditure grew by 37% annually in 2022.
An uncertain economic environment, particularly at the start of this year also led to high net worth individuals stocking up on gold just as central banks diversified their holdings. Data compiled by the Financial Times shows that pricey security vaults in London started filling with gold as of May 2023, with projections showing that capacity would be full by the end of this year. Additionally, the impact of Western sanctions against Russia has stoked other countries' worries about their central bank assets being frozen. In turn, this has generated speculation that perhaps global gold prices might be on track for record high levels. Some even believe that gold prices could soar to $3,300 per troy ounce to eclipse levels seen during the last major Middle Eastern conflict in the 1980s. Back then, the gold market entered a new bull run as oil prices soared along with rising inflation.
So, as the market appears to be re calibrating to adjust to turbulent economic times, we took a look at the top Canadian gold stocks among hedge funds. The top three picks in this list are Barrick Gold Corporation (NYSE:GOLD), Agnico Eagle Mines Limited (NYSE:AEM), and Kinross Gold Corporation (NYSE:KGC).
A close-up of the company's gold bars and certificates of authenticity, lit up by a spotlight.
Our Methodology
To compile our list of the best Canadian gold stocks, we first compiled all Canadian gold companies that are traded on the NYSE and the NASDAQ. Then, the number of hedge fund investors with stakes in them as of Q2 2023 was determined and the top Canadian gold stocks are as follows.
11. Sandstorm Gold Ltd. (NYSE:SAND)
Number of Hedge Fund Investors in Q2 2023: 15
Sandstorm Gold Ltd. (NYSE:SAND) is headquartered in Vancouver, British Colombia. Instead of mining gold, it holds royalty interests in gold producing properties and buys the metal from miners. With earnings season in the Canadian gold industry kicking off, the firm's preliminary Q3 2023 results revealed in October shared that its revenue had grown by 33% annually.
During 2023's second quarter, 15 out of the 910 hedge funds part of Insider Monkey's database had bought Sandstorm Gold Ltd. (NYSE:SAND) 's shares. Out of these, the firm's largest shareholder is Murray Stahl's Horizon Asset Management since it owns $30 million worth of shares.
Along with Agnico Eagle Mines Limited (NYSE:AEM), Barrick Gold Corporation (NYSE:GOLD), and Kinross Gold Corporation (NYSE:KGC), Sandstorm Gold Ltd. (NYSE:SAND) is a top Canadian gold stock being bought by hedge funds.
10. Osisko Gold Royalties Ltd (NYSE:OR)
Number of Hedge Fund Investors in Q2 2023: 17
Osisko Gold Royalties Ltd (NYSE:OR) is a diversified precious metals royalty company that also focuses on other precious materials such as diamonds in addition to gold. Heading toward its third quarter earnings, investors should be interested in its Costa Fuego deposits in Chile which are expected to start providing revenue mid 2024.
Insider Monkey took a look at 910 hedge fund portfolios for 2023's June quarter and discovered that 17 were the firm's shareholders. Osisko Gold Royalties Ltd (NYSE:OR)'s biggest hedge fund investor is Israel Englander's Millennium Management as it owns 6.8 million shares that are worth $105 million.
9. B2Gold Corp. (NYSE:BTG)
Number of Hedge Fund Investors in Q2 2023: 17
B2Gold Corp. (NYSE:BTG) is the first mining company on our list and one that also owns interests in properties along with operating its own. Its shares are rated Strong Buy on average, and in 2023, the firm has been busy expanding production capacity. B2Gold Corp. (NYSE:BTG) is nearing the completion of a mining property in Nunavut, Canada, and it has also expanded ownership stakes in a Colombian project.
By Q2 2023 end, out of the 910 hedge funds tracked by Insider Monkey had held a stake in the company. B2Gold Corp. (NYSE:BTG)'s largest stakeholder among these is Jim Simons' Renaissance Technologies courtesy of its $110 million investment.
8. IAMGOLD Corporation (NYSE:IAG)
Number of Hedge Fund Investors in Q2 2023: 21
IAMGOLD Corporation (NYSE:IAG) owns interests in thousands of acres of gold mining properties in Brazil, Burkina Faso, Canada, and other countries. While it is a relatively small company, with a market capitalization of $1.2 billion, nearly 70% of its shares are owned by institutional investors. This lends the stock stability but also leaves it susceptible to large swings.
For their June quarter of 2023 shareholdings, Insider Monkey dug through 910 hedge fund investors and discovered 21 IAMGOLD Corporation (NYSE:IAG) shareholders. The firm's biggest investor in our database is David Iben's Kopernik Global Investors as it owns a $47 million stake via 17.7 million shares.
7. Pan American Silver Corp. (NYSE:PAAS)
Number of Hedge Fund Investors in Q2 2023: 21
Pan American Silver Corp. (NYSE:PAAS) is a sizeable mining company with more than six thousand employees. Along with gold, the firm is also involved in the production of copper, zinc, and other metals. With the fourth quarter starting, it had to assuage investor concerns about a production hit from a mine shutdown in Mexico. However, robust silver prices and production resuming have helped the stock.
During this year's second quarter, 21 out of the 910 hedge funds part of Insider Monkey's database had held a stake in the company. Pan American Silver Corp. (NYSE:PAAS)'s largest hedge fund shareholder is David Greenspan's Slate Path Capital due to its $56 million investment.
6. Franco-Nevada Corporation (NYSE:FNV)
Number of Hedge Fund Investors in Q2 2023: 23
Franco-Nevada Corporation (NYSE:FNV) is a diversified natural resource streaming and royalty company that engages in the trade of gold, petroleum fuels, and other products. In today's turbulent environment, with high inflation and interest rates, the firm's $1.2 billion in cash and equivalents should provide a safety net in case of turmoil. Franco-Nevada Corporation (NYSE:FNV)'s cash and equivalents have more than doubled over the past couple of years, indicating management's intent toward stability.
23 out of the 910 hedge funds tracked by Insider Monkey were Franco-Nevada Corporation (NYSE:FNV)'s shares as of Q2 2023. Jim Simons' Renaissance Technologies owns the biggest stake among these as it owns $499 million worth of shares.
Barrick Gold Corporation (NYSE:GOLD), Franco-Nevada Corporation (NYSE:FNV), Agnico Eagle Mines Limited (NYSE:AEM), and Kinross Gold Corporation (NYSE:KGC) are some top Canadian gold stocks.
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Disclosure: None.11 Best Canadian Gold Stocks To Buy Now is originally published on Insider Monkey.
