5 Gold and Silver Stocks Ready to Soar

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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.

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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.

Gold and Silver Stocks – Silver Wheaton (SLW)

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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%+ move from here. I’ve recommended SLW calls to my Edge clients.

Gold and Silver Stocks – SilverCrest Mines (SVLC)

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SilverCrest Mines (SVLC) is a vertically integrated acquisition, exploration, development, extraction and processing company with operations in Mexico. The company is focused on rapidly expanding production of its assets in the State of Sonora, looking to take production from 2.7 million ounces in 2012 to upwards of 3.6 million this year.

Shares have been range bounce since coming public in 2012, rotating between $3 and $1.50 a share. With shares looking to break a three-month downtrend channel, with an upper bound at the 200-day moving average, I’m looking for a run at the February highs for a gain of 53%-plus from here.

I’ve recommended SVLC to my Edge clients.

Gold and Silver Stocks – Primero Mining (PPP)

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Primero Mining (PPP), another vertically integrated precious metals producer, operates in both Canada and Mexico. PPP is growing fast, with revenues expected to hit $353 million in 2015, up from $200 million in 2013.

The company reported a small loss for the first quarter, which dropped shares 20% from their mid-March high. A breakout is underway now as investors get excited about the company’s planned production expansion to upwards of 245,000 ounces this year from around 160,000 in 2013.

I’ve recommended PPP to my Edge clients.

Gold and Silver Stocks – Franco-Nevada Corp. (FNV)

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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.

Gold and Silver Stocks – Endeavour Silver (EXK)

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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.

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


Article printed from InvestorPlace Media, https://investorplace.com/2014/06/5-gold-stocks-silver-stocks/.

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