3 gold and silver stocks ready to soar

The stage is set for a bigger surge to the upside.

By InvestorPlace Jun 12, 2014 2:21PM

Image: Gold Bars © Photodisc/SuperStockBy 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

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.

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

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.


You can read about two more gold and silver stocks here.


More from InvestorPlace

Anthony Mirhaydari is founder of the Edge and Edge Pro investment advisory newsletters, as well as Mirhaydari Capital Management, a registered investment advisory firm.

Tags: SLW
25Comments
Jun 12, 2014 2:46PM
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Hedging against the Obama Dollar since 2009
Jun 12, 2014 3:23PM
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Unless you own physical gold and have it in your possession, you have what every other shareholder of every other stock in this Crock Market has, worthless paper; lines of code in a computer someplace.
Jun 12, 2014 3:12PM
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This is nothing more than the old adage of buying what has fallen out of favor, which tends to be better advice than buying what's hot.

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.

Jun 12, 2014 7:50PM
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Just waiting to "Ride the Next Wave" to "Realistic" Prosperity with Gold & Silver. It appears than many people are finally beginning to "Pull Back the Curtain" and see Obama, Reid & Pelosi hand cranking out those 10 cent Dollar bills, becoming ever more worthless daily, and realizing what so many of us have known since the Nixon days, that the Dollar is now worthless, since the true value & backing "of it's value" was & always will be the Gold that "Was & also Guaranteed" the true value of the Dollar.  So many of us had our parents and mainly grandparents advising us to buy and hold onto Gold and Silver, (at least 1/4 to 1/3 of our savings.  Every paper currency around the world has already or currently going the way of the dinosaur.  I'm just so glad that I listened.  I've bought low and sold high enough times that I owe nothing to no one now.  If not for the wisdom of those who have lived through the Great Depression and those who chose to take an even higher road than "Gambling" in the stock market (deceived into thinking it was the only way or option for our families futures) I would still be believing the lies that especially this current administration, and inside elite traders are telling us to just shut up and invest so they can get the inside info early and sell out the value of our stock  Truth is so very empowering.  Now, it's up to you to get what is owed to you or has been stolen from you back.  Start slowly if you must, but by all means gather up as much Silver and Gold as you can before while it is still at an affordable level to buy.  God Bless you, and may He grant you Wisdom & Peace.    
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Well wont be making any money here now that anyone on the internet now knows about these stocks.  However all are based on speculation rather than production of value.
Jun 12, 2014 3:21PM
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                               "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"

Jun 13, 2014 10:07AM
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It's always good to have metals in your portfolio. Not only for diversification, but a hedge against inflation; a topic that has risen it's head much recently. Now, some are advocating that we go back on the gold standard. The case is being made that if Nixon had kept us on the gold standard, our economy would be 50% larger now. That's quite a jump-I'll have to run those numbers myself before I'll give credence to this but never the less, it's intriguing.

and VL- I offer you the same deal for my 'golden dart predictor' as I did for Fat Cat. A very specially made dart (legal for competition too) that I can use to predict the next big stock purchase. Simply tack up the stock financials of the day to your wall, step back and throw it. Where it lands is what you trade on that day. Who say's gold is just a rock? :)
Jun 13, 2014 8:58AM
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Wait a minute, I thought it was going to $800 because it was a useless good for nothing rock.  Just use your head.  For at least 5,000 years gold as been coveted and used as a currency.  You folks can say gravity isn't real as well but to value gold is in our DNA. 
Jun 12, 2014 4:40PM
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I just want to get back to "even", the next time it pops 15%, it is gone...
Jun 13, 2014 7:25AM
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FAILURE ON A GLOBAL LEVEL...
So many times I have referred to Andrew Dickson White's accounting of economic failure in his book: Fiat Money Inflation in France. Anyone can stare at it's pages and pretend to read it but only a person with commonsense can grasp it's contents. White wrote it simply and matter-of-fact. There were these hubris-addicted fools. They believed in inflation economics to gain wealth without working in the real world. They used phony accreditation to form political thresholds, claimed to be in favor of the "People" and took over France. All the machinations are repeated today. The People are suppressed- now worldwide- exactly as then. The Pimple Class exists identically... above the rest and with most of the wealth hoarded, forcing suppression and stagnation. We all know what happened next. The next BIG THING wasn't Restoration Hardware, it was the guillotine. Time for a change we can actually believe in. The Fed prints it, it doesn't trickle, 27 new millionaires daily, 100% of them lean Right. Goodnight, right. 
Jun 13, 2014 10:33AM
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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.

Jun 13, 2014 10:06AM
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Folks, do not fall for this morning's sucker's rally to start the day, its just another ploy; volume is still low and manipulators are taking over things on and off the floor...Be cautious, not much has changed from the last couple of days. These crooks will try to bring us down big once again....Be careful.
Jun 13, 2014 10:52AM
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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.

Jun 13, 2014 6:41AM
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Commonsense-- we know that both stocks and bonds are heavily compromised by fiat money, so it makes complete sense that ANY investment is as well. Metals are hoarded. It makes too much sense that the hoarders control and can fix the price. As we crash, if they choose not to buy, all you have is- unsaleable rock or game tokens. Invest locally, you live there. 
Jun 12, 2014 6:52PM
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its better to buy bigger company  stocks like barrick or anglo gold they are safer
Jun 12, 2014 2:47PM
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I don't really need to invest in the stocks, when it is a better trade for me to just take actual option trades around gold and silver.  I have an account that I got at HowWeTrade, and I was reading there about how to make money on the trades.  Let's just say I would rather do that personally than take bets on gold stocks when the prices of the underlying commodities (gold and silver) are falling.
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