Precious metals and related mining stocks have been under a historic, soul-crushing selloff in recent weeks, as investors worry if the Federal Reserve — on rising odds of interest rate liftoff in December — is heading into a policy mistake with inflation still below target.
Inflation just isn’t a clear and present threat: Producer price inflation is cratering, dropping at a 1.6 percent annual rate as of October on a persistent drop in food prices.
On Monday, wholesale gasoline futures tested down to $1.20 a gallon — a level not seen since early 2009. Copper and crude oil are similarly weak. Other measures from China factory gate prices to U.S import prices all tell the same story.
But a closer look at the economic data reveals something is stirring on the price front that will soon attract growing attention. From rents and wage pressure to food prices and the fading impact of low energy prices, evidence is mounting that we’re on the cusp of an inflation turnaround.
This, coupled with the likelihood of a very slow and gradual policy tightening from the Fed going forward, has reinvigorated investor interest in gold and silver stocks.
Here are five worth checking out.
Shining Gold and Silver Stocks: Silver Wheaton (SLW)
Silver Wheaton (SLW) is rounding higher out of a possible inverse head-and-shoulders reversal pattern that started in July. The slope of the 50-day moving average is positive, while the stochastic indicator has triggered a buy signal deep in oversold territory.
The company reported earnings of 12 cents per share on Nov. 3, just below estimates, but on record silver production.
I have recommended shares to Edge subscribers.
Shining Gold and Silver Stocks: First Majestic Silver (AG)
First Majestic Silver (AG), on a technical basis, has a chart that looks remarkably similar to what’s happening with SLW: A long multi-month basing pattern going back to July, an oversold stochastic indicator and a rising 50-day moving average.
On Nov. 16, the company reported a 10% rise in year-over-year revenue.
I have recommended shares to Edge subscribers.
Shining Gold and Silver Stocks: Goldcorp (GG)
Goldcorp (GG) is a little weaker technically than the other picks here, falling incrementally below its July low. But options players are getting aggressive, with 1,630 Nov $12 call options trading vs. open interest of 4,590 Thursday morning — just one day ahead of expiration.
Analysts at RBC Capital Markets lowered their price target to $17 — a 41% move from here — as it awaits operating and development detail from the company’s Éléonore and Cochenour mines.
I have recommended shares to Edge subscribers.
Shining Gold and Silver Stocks: Barrick Gold (ABX)
Barrick Gold’s (ABX) chart is similar to the others here, but slightly stronger with the stochastic indicator forming a pattern of higher lows since July.
Shares are also already above their 50- and 20-day moving averages.
The company announced on Nov. 12 that it had reached an agreement to sell non-core assets in Nevada for $720 million in cash to help fund other interests and meet its stated debt reduction goals.
I have recommended shares to Edge subscribers.
Shining Gold and Silver Stocks: Kinross Gold (KGC)
Same story with Kinross Gold (KGC): A possible inverse head-and-shoulders reversal pattern, a rising 50-day moving average and a buy signal on the stochastic indicator. On Nov. 10, the company reported better-than-expected earnings on a 14% drop in revenues (PDF).
With a lower share price, KGC is this list’s most speculative pick. But a mere return to the 200-day moving average would be worth nearly a 20% gain from here.
I have recommended shares to Edge subscribers.
Anthony Mirhaydari is founder of the Edge and Edge Pro investment advisory newsletters. A two-week and four-week free trial offer has been extended to InvestorPlace readers.
