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% 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% 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 five gold and silver stocks that should surge to the upside as prices rise and investors seek out inflation protection.