Adding some ASX gold shares to a diversified investment portfolio can be a great way to hedge against market downturns. Investors see gold as a safe-haven asset, so its value tends to rise during times of economic uncertainty.
Indeed, so far in 2024, the spot gold price has risen from US$2,077 an ounce to US$2,312 an ounce (at the time of writing). This keeps ASX gold shares firmly in the spotlight — albeit tempered today by a slightly less glittering trading week for some gold miners and the S&P/ASX All Ordinaries Gold Index (ASX: XGD). The index has slipped 1.6% this week but is trading 1.33% higher year to date.
So, if you're looking to take advantage of the dip and jump aboard the ASX gold train express, you're in luck! Because we asked our Foolish writers which ASX gold shares they reckon look the brightest right now.
Here is what they said:
6 best ASX gold shares for May 2024 (smallest to largest)
- West African Resources Ltd (ASX: WAF), $1.43 billion
- Capricorn Metals Ltd (ASX: CMM), $1.80 billion
- Ramelius Resources Ltd (ASX: RMS), $2.19 billion
- Evolution Mining Ltd (ASX: EVN), $7.41 billion
- Northern Star Resources Ltd (ASX: NST), $16.47 billion
- Newmont Corporation (ASX: NEM), $71.52 billion
(Market capitalisations as of market close 3 May 2024).
Why our Foolish writers dig these glittering ASX gold stocks
West African Resources Ltd
What it does: West African Resources holds a 90% interest in the Sanbrado gold mine in Burkina Faso. The miner also has exposure to other developments, including the Kiaka Gold Project and Toega Gold Deposit, which are also situated in the Burkina Faso region.
By Mitchell Lawler: Many mining investors will wipe regions with legislative and political instability from their screening list. Australia is often considered the crème de la crème of mining jurisdictions. But that can also mean everyone is fishing in a crowded fishing hole.
This is partly why I like what is on offer from West African Resources. The region it operates in is arguably slept on, making gold miners located here relatively cheap compared to their Australia-based peers.
Regarding fundamentals, Sanbrado touts 19.8 million tonnes in reserve at 2.4 grams per tonne, amounting to 1.5 million ounces of gold. West African Resources' all-in-sustaining cost (AISC) is forecast to fall below US$1,300 per ounce – suggesting thicker profits to come.
There are risks with the region, but I believe shareholders could be well compensated for them.
Motley Fool contributor Mitchell Lawler does not own shares of West African Resources Ltd.
Capricorn Metals Ltd
What it does: Capricorn Metals is an Australian-based gold producer operating the Karlawinda Gold Project in the Pilbara region of Western Australia. The company is also developing the Mt Gibson Gold Project in the mid-west region of the state.
By James Mickleboro: I think Capricorn Metals could be a great ASX gold share to buy in May. This is particularly true given the company's recent pullback, which has left its shares trading at a deep discount to the 52-week high they reached only last month.
The drop has been driven largely by a surprise miss on its production during the third quarter because of heavy rainfall at the Karlawinda Gold Project. This is the first time since the miner has produced gold that it has been forced to downgrade its production guidance. It now expects to achieve production of 112,000 to 115,000 ounces in FY 2024 instead of 115,000 to 125,000 ounces.
But it should be onwards and upwards for the company from here. Thanks to the Mt Gibson Gold Project, Capricorn Metals has a pathway to production of >270,000 ounces per annum. This would rank the miner among the top 10 ASX gold producers.
But even better, its AISC is forecast to be in the lowest quartile in the Australian gold industry.
It is no wonder then that Bell Potter is feeling very bullish about this ASX 200 gold share. It recently described Capricorn Metals as a "sector-leading gold producer with a strong balance sheet, clear organic growth options and a management team with an excellent track record of delivery."
The broker currently has a buy rating and a $6.50 price target on Capricorn Metals shares.
Motley Fool contributor James Mickleboro does not own shares of Capricorn Metals Ltd.
Ramelius Resources Ltd
What it does: Ramelius Resources is a Western Australian gold producer. The company owns and operates two production and processing hubs in WA. It also mines and hauls ore from its Penny, Marda & Symes gold mines. Ramelius is currently developing its Rebecca/Roe and Cue gold projects.
By Bernd Struben: Outside of the past few days, ASX gold stocks have been enjoying a great run since the end of February. And, as I believe the gold price is likely to continue trending higher over the next year, that great run likely isn't over.
My Foolish colleagues have tipped some very promising miners in this article. But I believe Ramelius is likely to lead this golden pack.
Ramelius released its quarterly production update on 22 April, and the results speak for themselves. The WA gold miner achieved a record quarterly gold production of 86,928 ounces. As for the important cash flow metric, Ramelius' free cash flow of $125 million over the three months was also record-breaking.
And the balance sheet is very strong, with the miner holding net cash and gold of $407 million.
As a sweetener, Ramelius shares trade on a fully franked trailing dividend yield of around 1%.
Motley Fool contributor Bernd Struben does not own shares of Ramelius Resources Ltd.
Evolution Mining Ltd
What it does: Evolution is one of Australia's largest listed gold explorers and producers, with operations in both Australia and Canada.
By Bronwyn Allen: Goldman Sachs has a buy rating on Evolution and a recently raised 12-month share price target of $4.25, up from $3.73 per share at Friday's close. This implies a near 14% potential upside from today's share price and follows a 3.3% lift for the gold stock over the past 12 months.
The broker recommends the stock based on valuation and strong margins further supported by copper credits, which it says will make Evolution more defensive in the future when gold prices may be lower. The broker also notes that the miner is deleveraging with diversified organic growth options across its portfolio.
Goldman commented: "We see EVN's growth outlook as more diversified and lower risk than some peers." The broker has raised its predictions for earnings per share (EPS) over the next three financial years. Its EPS tip for FY24 is up 9% to 25 cents per share, FY25 is up 2% to 44 cents per share, and FY26 is the same at 48 cents per share.
Motley Fool contributor Bronwyn Allen does not own shares of Evolution Mining Ltd.
Northern Star Resources Ltd
What it does: Northern Star Resources is an Australian gold producer with mining projects in Jundee and Kalgoorlie, Australia, as well as in Pogo, Alaska. The company describes the Kalgoorlie Consolidated Gold Mines (KCGM) as a world-class asset.
By Tristan Harrison: As one of the biggest gold miners on the ASX 200, I believe Northern Star can benefit from its significant size as it works towards its long-term targets.
In FY24, the company expects to sell between 1.6 million and 1.75 million ounces of gold. But by FY26, production/sales are predicted to reach as much as 2 million ounces. And I'm optimistic that the bigger the miner can become, the greater efficiencies of scale and margins it can achieve.
The higher gold price should also help boost Northern Star's profitability over the coming reporting periods as production increases. According to a recent note from broker UBS, the company's net profit after tax (NPAT) could jump from a projected $529 million in FY24 to $1.29 billion in FY25, a rise of 145%. I think the market will respond favourably if Northern Star can deliver on this exciting prediction.
In earnings per share terms, Northern Star Resources is projected to generate $1.11 of EPS in FY25. This would put the Northern Star share price at 13x FY25's estimated earnings.
With that increased profitability, the miner is predicted to pay an annual dividend per share of 43 cents. That would represent a dividend yield of 3%, excluding any potential franking credits, based on current pricing. The ongoing share buyback can also boost shareholder returns.
Northern Star's recent resources, reserves and exploration update saw the group mineral resources increase by 3.9 million ounces to 61.3 million ounces due to ongoing exploration success.
The gold price is not guaranteed to remain as high as it currently is, but I feel this ASX gold miner is primed to make hay while the sun shines.
Motley Fool contributor Tristan Harrison does not own shares of Northern Star Resources Ltd.
Newmont Corporation
What it does: Newmont is one of the largest gold miners in the world. Although it is based in the United States, its recent acquisition of Newcrest Mining means ASX investors can buy its shares on our local market.
By Sebastian Bowen: Thanks to the Newcrest acquisition, Newmont is the only gold stock I own. I opted to hold onto my shares, partly because of Newmont's enormous size and scale.
In my view, the company's low-cost and high-reserve mines and huge economies of scale make it one of the best ASX gold shares to own.
Over 2023, Newmont reported an AISC of US$1,444 per ounce, which is fairly low compared to its peers.
In this way, I think Newmont shares allow ASX investors to get some effective exposure to the gold price without the risks of a damaging capital loss that might come from a smaller-tier miner.
Newmont also pays a decent (by gold miner standards) dividend yield of just over 1%, which is paid out quarterly.
If any ASX investor is looking to add some of the advantages that investing in gold can bring to an ASX portfolio, I think Newmont shares are a great place to start.
Motley Fool contributor Sebastian Bowen owns shares of Newmont Corporation.
