The 7 Best Gold Stocks to Buy for Portfolio Diversification

Gold is generally a safe haven investment that provides stability in difficult economic conditions. The asset generally has a low correlation to stock, bond and crypto markets, so it is prudent to invest in the best gold stocks now.

2022 has been an incredibly difficult year for financial markets. The S&P 500 fell 19.4%, while the crypto market and 30-year US Treasury futures lost 64% and 21.6% of their values ​​in 2022. Conversely, the growth of the gold futures contract remained stable. These results reinforce my previous point about the weak correlation of the yellow metals with the capital markets. That said, markets are still remarkably volatile, which reinforces the need for investments in safe-haven assets, including these top gold stocks.

Best Gold Stocks: Newmont Corporation (NMS)

Topping the list of best gold stocks is Denver Newmont Corporation (NYSE:NMS), one of the largest gold mining companies with a sparkling track record of growth on both lines. In addition to gold, it is also involved in the production of other precious metals including copper, silver, zinc and lead.

Gold price volatility, unfavorable economic climate and supply chain crisis last year resulted in negative revenue growth. However, it has done well to control costs and produce relatively strong margins on a year-over-year basis. Moreover, it has a huge cash balance of $3.2 billion and a free cash flow margin of 11.6%, which is a testament to its great flexibility. Once gold prices start accelerating again, I expect NEM stocks to follow, and then some. Additionally, with 96 million ounces of proven reserves, Newmont has excellent cash flow visibility throughout the decade.

Best Gold Stock: Kinross Gold (KGC)

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Kinross Gold (NYSE:KGC) is a penny gold stock poised for a massive rally if gold prices begin to rise again. Kinross’ top and bottom results improved significantly on the back of strong gold prices in the early months of 2022. Over the following months, the business was able to offset lower gold prices by higher production.

It concluded its last quarter with a 75% increase in gold production to 595,683 gold equivalent ounces (Au eq. oz). In addition, the firm expects a production of 2.1 million Au eq. oz. in 2023, 140,000 Au eq. oz. higher than last year. Additionally, he expects a 5% increase in sustaining costs to $1,271/oz. Nonetheless, with a dividend yield of 3.1% and KGC shares trading at multi-year lows, you have a long-term winner poised for big gains.

Barrick Gold (GOLD)

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Barrick Gold (NYSE:GOLD) represents the cream of the crop in gold mining. The Canadian company operates 13 gold and copper mines from Nevada to sub-Saharan Africa under the dynamic leadership of its CEO, Mark Bristow.

The company has been one of the most profitable businesses in the industry, generating EBITDA margins of almost 50% over the past five years. Moreover, despite a difficult 2022, its profitability indicators were mostly in line with its historical averages. Its fourth quarter results showed a 13% sequential increase in gold production at a slightly higher realized gold price of $1,728/oz. All-in sustaining costs fell to $1,242/oz from $1,269/oz in the third quarter. For fiscal 2023, it expects to produce between 4.2 and 4.6 million ounces of gold, ending a three-year decline.

Another massive opportunity for the company comes from its copper mining division, which contributes 18% to total revenue. This number could increase significantly over the next few years due to several long-term projects in development.

Agnico Eagle Mines (AEM)

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Agnico Eagle Mines (NYSE:AEM) was arguably the top gold producer last year despite a tough cost and labor environment. It grew with superior cost control, with record margins exceeding its 5-year averages. Additionally, it advanced its expansion plans to increase mineral resources and aimed to consolidate its position in the most lucrative mining jurisdictions.

The miner’s aggressive merger and acquisition activity, along with its efficient execution, led to a rapid increase in gold mineral reserves. Gold mineral reserves at the end of 2022 increased by 9% to reach 48.7 million Au eq. oz. thanks to record annualized production. Its payable gold production was 3,280,731 Au eq. oz., a whopping 62% increase over last year. Much of the increase is attributable to the integration of Kirkland Lake Gold, another in the long list of businesses that AEM has acquired over the years.

Another element of its bullish scenario is its strong dividend profile, where payouts have risen seven years with a 3.3% yield. Its growth rates over 5 years amount to an impressive 30.7%.

fields of gold (GFI)

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fields of gold (NYSE:GFI) is one of the leading gold mining companies in the resource-rich region of South Africa. The company operates mines in South Africa, Australia, Peru and Ghana according to its profile. GFI shares lost 30% of their value last year as structural headwinds weighed on the stock.

Perhaps the biggest hurdle at Gold Fields was South Africa’s energy crisis last year due to the collapse of Eskom. However, despite concerns about load reduction, the Wits Basin mine held its own, achieving spectacular results last year, with production levels and free cash flow increasing by 12% and 33%, respectively.

Additionally, production in its Australian segment increased 4% year-on-year despite weather delays. Also, after multiple delays, its surface gold-silver project in Chile is expected to start production this year. The asset could potentially contain premier oxide minerals that could be mined efficiently at low cost. Therefore, there is a lot to expect with GFI shares.

Franco-Nevada (FNV)

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Franco-Nevada (NYSE:FNV) is a precious metals company specializing in gold-focused royalties and streaming. Instead of mining assets, it funds mining companies for a percentage of sales or mined precious metals. The FNV stock presents itself as a relatively safe bet in a volatile trading environment. This notion is exemplified by its high-quality profitability measures, which show gross margins and EBITDA of 87% and 84% on a twelve-month basis.

According to its latest report, FNV had $2.2 billion in available capital, zero debt and $1 billion in operating cash flow. Additionally, its leveraged free cash flow exceeds 50%, which is mind-boggling given the volatility of the business environment. With its disciplined capital management and low-risk business model, FNV stock should remain strong for the foreseeable future.

Company of Minas Buenaventura (BVN)

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Company of Minas Buenaventura (NYSE:BVN) operates a high quality precious metals business in Peru.

Peru’s mining sector has always been crucial to its economy. It is the second largest producer of copper and a major producer of silver, zinc and other minerals. Moreover, it has a strong ecosystem for mining, including rich mineral resources, favorable government policies, skilled workforce, and strong small-scale mining environment. Therefore, it will always remain relevant in the mining sector, enhancing the attractiveness of BVN stock.

It was a familiar tone to BVN quarterly compared to other gold miners discussed in the article. Its fourth quarter results were relatively encouraging, beating estimates on both lines while effectively trimming losses. Its cash position reached an impressive $253.9 million at the end of December, while net debt fell by $484.6 million. The stock is trading under $8, which is worth betting for the long haul.

As of the date of publication, Muslim Farooque had (neither directly nor indirectly) any position in the securities mentioned in this article. The opinions expressed in this article are those of the author, subject to InvestorPlace.com publishing guidelines.