With stocks stumbling out of the gate to start 2015, investors are cozying up to safe haven assets in a big way. Treasury bonds have been popular, pushing the 10-year yield down below 2% for the first time since early 2013. The U.S. dollar has been plenty popular as well, reaching levels not seen since 2005.
And now, precious metals are on the move with gold and silver threatening to break up and out of a multi-month basing pattern. The related mining stocks are perking up too, with the Market Vectors Junior Gold Miners (GDXJ) jumping over its 50-day moving average this week for the first time since August.
Obviously, it’s not inflationary concerns that are driving the move; but increased risks of a currency or global debt problem centered in Europe (with a possible Greek exit from the eurozone following elections on January 25) or Asia (with Japan looking vulnerable to any reversal in the yen’s recent weakness).
In response, I’ve recommended to following five stocks to my Edge subscribers.
Seabridge Gold (SA)
Seabridge Gold (SA) is developing mining properties throughout North America for the production of gold, silver, copper and molybdenum ores. The company is focusing in areas in British Columbia and the Northwest Territories in Canada. At the end of December, despite expectations to the contrary, the company received Federal permits for its KSM project in B.C., ending a process that started back in 2008 involving an Environmental Assessment Application of more than 35,000 pages.
Analyst Don MacLean at Paradigm Capital notes that this result gives the company access to one of the “world’s best undeveloped coper-gold deposits in a safe jurisdiction — and permitted — making it a rare asset.”
A return to the August high is in order — a 30%+ move from here.
Based in Peru, Buenaventura (BVN) mines and processes both gold and silver in addition to other metals such as lead, zinc and copper. The company’s operations are focused in its home country. Earnings are expected to grow 30% into 2015 to 79 cents per share.
I’m looking for a jump over the 200-day average for a target near $12 per share — a 14%-plus move from here.
New Gold (NGD)
New Gold (NGD) has operations in Canada, California, Mexico, and Australia and is exploring in the Atacama region in Chile. The company recently acquired Bayfield Ventures, adding three properties totaling more than 2,500 acres in north-western Ontario.
Earnings are positive and expected to grow 62% in 2015 on a 10%-plus jump in revenue.
Anglogold (AU) mines gold, silver, uranium oxide and sulphuric acid (as a byproduct) at its 20 operating facilities around the world. Earnings are expected to grow more than 30% in 2015 according to Reuters data. Shares are deeply oversold, down by more than 50% from the highs hit back in March.
A mere return to the 200-day average, last touched in September, would be worth a 40% move from here.
Yamana Gold (AUY)
Yamana Gold (AUY) mines gold throughout the Americas, including Brazil, Chile, Argentina, and Mexico. Analysts at Raymond James, in a note to clients, highlighted the company’s efforts to dump underperforming mines to concentrate on its five core facilities. As a result, they are looking for valuations to bounce back in 2015. A test of the 200-day average, not seen since August, would be worth a 50% gain from here.