Stocks rebounded strongly on Monday after a much weaker-than-expected nonfarm payrolls report — the weakest jobs numbers in two years — reignited hopes that the Federal Reserve would need to hold off on its first interest rate hike since 2006.
The futures markets is increasingly pricing in the possibility that no action will be taken until the beginning of 2016. The logic is that the Fed, after reinforcing the data dependency of any policy changes, will be forced to hold off as a slowdown in job creation joins a cavalcade of other economic data points that have softened recently.
As a result, the “cheap money” trade is back on, led by weakness in the U.S. dollar. That activity is lifting the entire commodity complex with oil, gold, and silver being the big winners. The ProShares UltraSilver (ETF) (NYSEARCA:AGQ) position I recommended to Edge subscribers is already up more than 5.1% so far this month — with room for much more as the Fed is likely to hold off on any action until higher inflation arrives.
Both energy and precious metals stocks are lifting in sympathy as well. Here’s a look at five gold and silver stocks that are breaking out right now.
Gold and Silver Stocks to Buy — Barrick Gold Corp.
Barrick Gold Corporation (USA) (NYSE:ABX) is a producer of both gold and copper with operations around the world. Headquartered in Toronto, Canada, it maintains operations in countries as wide ranging as the United States and Saudi Arabia to Papua New Guinea and Zambia.
ABX stock got a lift over the weekend after the Financial Times reported the company may be considering asset sales and joint ventures in an effort to cut debt and rebuild trust with investors. The company will report Q1 results on April 27 after the close. Earnings are expected to remain largely flat this year before expanding nearly 24% in 2016.
Gold and Silver Stocks to Buy — NovaGold Resources Inc. (USA)
NovaGold Resources Inc. (USA) (NYSEMKT:NG) explores and develops mining assets in Canada and the United States, concentrating on its 50%-owned Donlin Gold asset in southwestern Alaska. NG stock is rocketing up and out of a two-month consolidation range, retaking its 200-day moving average for the first time since January.
The company is more speculative than the others presented here, still in the development stage with no reported revenues. But a return to the February highs would be worth a 19%-plus gain from here.
Gold and Silver Stocks to Buy — Agnico Eagle Mines Ltd (USA)
Agnico Eagle Mines Ltd (USA) (NYSE:AEM) explores, develops and produces commodities and precious metals in its LaRonde mine in northwestern Quebec. The company also operates in Europe, Latin America, and the United States.
Shares have been sliding lower since last January, but look ready to push into a fresh uptrend for the first time since December.
Gold and Silver Stocks to Buy — Silver Standard Resources Inc. (USA)
Silver Standard Resources Inc. (USA) (NASDAQ:SSRI) mines for silver, gold, zinc and lead, concentrating on the Puna de Jujeña region of northwestern Argentina as well as a property in Humboldt County, Nevada.
Shares are coming off of a quadruple bottom pattern going all the way back to November. A simple test of the 200-day moving average — last approached in January — should be worth a near-28% gain from here.
Analysts expect SSRI to turn to profitability this year, with the consensus being for earnings of nine cents per share.
Gold and Silver Stocks to Buy — Hecla Mining Company
Hecla Mining Company (NYSE:HL) produces and markets gold and silver as well as lead, zinc and bulk concentrates. Its facilities are located in southeastern Alaska, the Coeur d’ Alene region of Idaho and the Abitibi region in Quebec.
Shares have been trading near current levels since early 2013, forming a strong base of support to rise out of as better base metals prices lift top-line growth.
Anthony Mirhaydari is founder of the Edge and Edge Pro investment advisory newsletters.
