3 gold and silver stocks ready to soar
The stage is set for a bigger surge to the upside.
By Anthony Mirhaydari
Gold and silver stocks have gone exactly nowhere over the past year, constrained by weakness in their underlying precious metals.
This, in turn, has been driven by a drop in inflation expectations, reduced fears over the situation in Ukraine, and perhaps some good, old fashioned market manipulation courtesy of Chinese commodity financing deals as well as big bank shenanigans.
Yet things are beginning to change.
Gold and silver stocks are rebounding nicely so far this month. The Market Vectors Junior Gold Miners (GDXJ) is up nearly 15 percent off of its late May low and is challenging its 200-day moving average for the first time since April.
The catalyst appears to be a slow creep up in inflation expectations. There's good reason for this. Consumer price inflation has already returned to the Federal Reserve's 2 percent target, but more seems likely. The labor market is tighter than everyone gives it credit for, setting the stage for wage inflation to join with the inflation we're already seeing in food, fuel, shelter costs, and health care.
If so, here are three gold and silver stocks that should surge to the upside as prices rise and investors seek out inflation protection.
Silver Wheaton (SLW), based in Vancouver, Canada, is the world's largest precious metals streaming company. Instead of operating mines directly, it purchases for an upfront payment the right to purchase all or a portion of silver and gold production, at a fixed cost, from mines in political stable regions worldwide.
The advantage of this strategy is that the company's cost structure is fixed, giving investors great upside exposure to any increases in silver and gold prices by insulating them from the need for additional production and exploration expenses.
Shares of SLW are challenging their 50-day moving average for the first time since January. A return to the March high would be worth a 24 percent-plus move from here. I've recommended SLW calls to my Edge clients.
Franco-Nevada Corp. (FNV), like SLW, is a precious metals royalty and stream company that also has some exposure to oil and gas assets. Again, the advantages here are upside exposure to gold and silver prices with limited downside risk since it's not exposed to exploration and production costs.
Moreover, in comparison to holding physical gold or a gold ETF fund, FNV pays nearly a 2% dividend yield -- providing some cash flow in addition to the inflation protection.
Shares look ready to break out of a five-month consolidation pattern to the upside. I've recommended PPP to my Edge clients.
Endeavour Silver (EXK) is enjoying a very powerful upside move that's taken shares above both their 200-day and 50-day moving averages, ending a downtrend going back to February. EXK is trying to move into profitability this year, harnessing its assets in Mexico.
The company's claim to fame is buying underperforming assets, then using its expertise to invest in and revitalize the properties, expanding production. EXK is also developing properties in Chile.
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I hear land in Detroit is really cheap right now. Hey if you are as rich as the President, you could buy up enough of it to get the city named after you.
"GOLD and SILVER" will sink the DOW
Between 1970-73 Silver was $1.50 to $3.00/oz
In 73 Herbert Hunt started buying Silver and by 74 they owned about 55 million ozs
or 8% of the Worlds Silver.
By the spring of 74 Silver was $6.00/oz and by 79 the price of Silver was DOUBLED from $8.00 to $16.00, in only two months.
By Dec 31st of 79 Silver was $34.45/oz and by Jan 21st of 1980 Silver hit $50.00/oz and by March it had slid to $21.00/oz
By March 27th of 1980 Silver opened at $15.80/oz and closed at $10.80
On that same day of March, "The STOCK MARKET CRASHED " due to the rumors the Hunt Brothers were selling stock to cover their losses in the "Silver Trade"
by June of 1982 Silver was back to $4.98
So, now 32 years later "History is about to repeat itself"
GOLD and SILVER will "SINK the DOW"
There was a "sucker's rally" this morning, And I missed it...?? Better luck next week, maybe..??
I guess "Gold is just a rock", but there are a few differences between Granite and Gold...
Gold is heavier..
Gold is usually worth more, in value.
And Gold is prettier...
That's about enough for me, I'll take the Gold please.
Well that "rally" sure isn't dragging any of our stocks along with it, most are down a little.
But with this kind of action, I thought we should have an Anthony Merryday article out soon..?
And Lo' and Behold, Viola.....!!!
Well at least it's Friday......TGIF.
thanks anthony. we doubled up from 1% to 2% today and will continue to double into any established uptrend until the fed is forced to act. we like gdx.
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Investors are anxious to see if hiring can maintain its strong pace in the second half of the year.
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