What Gold Stocks Does Cramer Recommend?

Jim Cramer is one of the top financial analysts in media. As a former hedge fund manager, he has the insights needed to make his CNBC Mad Money show a useful investment resource. He also co-founded TheStreet.com to provide financial advice.

With stock markets choppy of late, Cramer has some advice for investors – buy gold. He considers it an “ideal insurance policy for your portfolio” during these uncertain times. But what gold stocks does Cramer recommend?

Not all gold is created equally. There are a variety of ways to invest in the precious metal, including buying physical gold, investing in a gold mining company, or even aiming at a gold exchange-traded fund (ETF).

So what gold stocks does Cramer favor?

Top Gold Stock Cramer Recommends: Barrick Gold?

You can’t discuss gold investments without mentioning Barrick Gold Corp (NYSE:GOLD). It’s among the largest gold mining companies in the world, with production of about 5 million pounds of gold and 500 million pounds of copper in 2020 alone.

Although headquartered in Toronto, Canada, the company is dual-listed and trades on the New York Stock Exchange too.

Besides the United States, Barrick has gold mining operations throughout South America and Africa. It also has large copper mining operations in Chile, Zambia, and Saudia Arabia. The company grew over the years through mergers and acquisitions, often buying out smaller outfits to expand its operations.

Despite its size and stature, Barrick is mired by controversial business practices. Multiple human rights organizations, including Amnesty International, have investigated the company, and it’s been the focus of several lawsuits. However, it continues to grow its operations, posting an impressive $2.32 billion in net earnings for 2020.

The company also pays a healthy dividend yield of 0.82 percent. Net earnings per share were $1.15 for that year, and Barrick reported $3.36 billion in free cash flow heading into 2021. The company issued guidance of about 4.5 million ounces of gold production for 2021. If it hits that mark, it will make current investors happy.

And Cramer isn’t the only high-profile investor excited by it.

Barrick Gold Was a Buffett Favorite Too

It’s not just Cramer, either – the Oracle of Omaha Warren Buffett is also invested in Barrick Gold through his Berkshire Hathaway (BRK.B) holding company.

According to a disclosure in 2020, Berkshire bought 20.9 million shares of Barrick Gold for $562 million during the second quarter of that year.

However, unlike a typical Buffett investment, Barrick Gold doesn’t appear to be a long-term investment for Berkshire. Instead, the company appears to have sold shares throughout the rest of the year.

By the third quarter, the company “only” owned 12 million shares, which means it sold off the rest after the price jumped on the announcement of Berkshire buying in the first place.

This makes it more likely that Buffett wasn’t involved at all. In recent years, he’s said to only approve investments over $1 billion. Because Barrick’s investment was barely half that, it’s likely another fund manager made the purchase.

Also, it’s clearly meant for a short-term investment to provide liquidity, as the company sold off the bulk of its holdings by year end.

In fact, by 2021, Berkshire Hathaway sold all of its stake in Barrick Gold. The company no longer owns any Barrick Gold, which is something to consider if you buy in right now.

Why Does Cramer Recommend Agnico Eagle Mines?

Of course, Barrick isn’t the only gold stock Cramer recommends. He’s also bullish on Agnico Eagle Mines Ltd (NYSE:AEM).

This Canada-based gold producer operates in Canada, Finland, Mexico, and the United States. It also grew over the years through mergers and acquisitions.

Besides gold, the company also mines copper, zinc, and silver. And it’s involved in both mining and exploration, it enjoys vertical integration that can sustain the business long term.

AEM has paid a regular dividend since 1983, which is sitting at 0.82 percent currently.

Cramer hasn’t recommended the stock since 2019, but many analysts are still taking his old information to heart. This is because the company is largely unaffected by the pandemic and will continue its mining operations through the 2020s.

Of course, investing in gold because Cramer recommended it is not sufficient reason to buy. Investing a full two years after he last mentioned the company is even more risky. Stock market advice isn’t evergreen, and it’s possible Cramer’s stance on both gold investments has changed over time, especially since he explains gold has a time and place in a portfolio.

Gold Is Dangerous According to Cramer

Cramer isn’t a Boomer who ignores the validity of cryptocurrency. In fact, Cramer announced in September 2020 that gold is dangerous to own due to the threat of cryptocurrency attracting investors who would otherwise favor gold.

Indeed, he has claimed that he would invest one percent of his net worth into crypto. Many investors followed suit, and it’s appearing increasingly normal in 2021 for the uber-rich to have 1 percent of their net worth in Bitcoin. Look no further than famed investor, Paul Tudor Jones, as an example.

He explains on Mad Money that his children don’t believe in gold. Younger people don’t have safe ways to store physical gold, and that makes it a dangerous investment for them compared to digital currencies. It can easily be lost or stolen, and that’s why he’s unlikely to invest in the physical precious metal.

But is Cramer right?

Is Jim Cramer Right About Gold?

Jim Cramer sees gold as a hedge against inflation. He thinks bullion, the SDPR gold shares, an ETF, and investments like Barrick Gold are ripe for investment. Even gold futures are great in his opinion, as the price is far from its high earlier this year.

Of course, other metals are vying for investor attention too. Copper is making a comeback thanks to electric vehicles, but the attraction to gold remains high. In another decade, it’s possible that your gold investment will outperform holding cash. 

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The author has no position in any of the stocks mentioned. Financhill has a disclosure policy. This post may contain affiliate links or links from our sponsors.