The Federal Reserve held off on another interest rate hike on Wednesday, as expected, but left the door open to the start of a “quantitative tightening” balance sheet tightening as soon as September. Again, this was expected.
What was unexpected, however, was a tip of the hat by policymakers to a recent cooling in the inflation data.
The key was that the Fed removed the term “recently” from the statement that inflation measures “have declined” — leading many to assume the Fed believes the recent dip in inflation may be longer lasting. Moreover, the descriptor that inflation has been running “somewhat below” the Fed’s 2% target was removed.
In response, the U.S. dollar dropped hard pushing the PowerShares DB US Dollar Index Bullish (NYSEARCA:UUP) down 0.4% to levels not seen since last June. Adding to the dynamic was some hawkish comments from a European Central Bank official right before the Fed policy statement hit, noting that it was time to start discussing the end of their bond buying stimulus program.
The result was a big jolt higher in precious metals, with gold and silver stocks looking ready to emerge from a long slumber. The precious metals, and the related mining stocks, have done basically nothing since November. That could be ready to change now.
Here are five gold and silver stocks to watch:
Gold and Silver Stocks on the Rise: Newmont Mining (NEM)
Newmont Mining Corp (NYSE:NEM) has been on the move this week after reporting better-than-expected results. Shares have surged more than 17% from the low hit earlier this month, returning to highs not seen since February. This also takes the stock above its 200-day moving average — setting up a possible breakout from a nine-month consolidation range.
NEM will next report results on October 24 before the bell. When earnings were last reported on July 25, income of 36 cents per share beat estimates by 10 cents on a 12.3% rise in revenue. Watch for a run to the September highs near $42, which would be worth a 13%+ gain from here.
Gold and Silver Stocks on the Rise: Goldcorp (GG)
Goldcorp Inc. (USA) (NYSE:GG) shares are rising up and over their 50-day moving average as a three-month consolidation range continues to provide downside support. Watch for a run at the 200-day moving average, which hasn’t been tested since March. A return to the February high near $17.50 would be worth a near 30% gain from here.
GG will report results after the close on Wednesday. Earnings of 9 cents per share on revenues of $862 million are expected. When results were last released on April 26, earnings of 20 cents per share beat estimates by 11 cents on revenues of $876 million.
Gold and Silver Stocks on the Rise: Agnico Eagle Mines (AEM)
Agnico Eagle Mines Ltd (USA) (NYSE:AEM) shares have jumped over their 200-day and 50-day moving averages in one fell swoop today rising off their pre-Fed intra-day lows. The stock has been mired in a pennant formation since last summer, one that has been steadily tightening in a series of higher lows and lower highs throughout 2017. Watch, at the least, for a return to the May/June highs near $50, which would be worth a 6%+ gain from here.
AEM will next report results on Wednesday after the close. Analysts are looking for earnings of 16 cents per share on revenues of $529 million. When the company last reported results on April 27, earnings of 28 cents per share beat estimates by 17 cents on an 11.6% increase in revenues to $547.5 million.
Gold and Silver Stocks on the Rise: Hecla Mining (HL)
Hecla Mining Company (NYSE:HL) shares are moving to challenge their 50-day moving average, continuing in a sideways crawl that has been in play since last summer. Merely a return to the top of the range near $7 a share would be worth a near 30% gain from here. A challenge of the 200-day moving average, and a turn at the April-June highs near $6 would be worth a 10% gain.
HL will next report results on Aug. 3 before the bell. Analysts are looking for earnings of a penny on revenues of $130.5 million. When the company last reported on May 8, earnings of 4 cents per share beat estimates by a penny on an 8.8% jump in revenues to $142.5 million.
Gold and Silver Stocks on the Rise: Kinross Gold (KGC)
Kinross Gold Corporation (USA) (NYSE:KGC) shares have been stronger than the others presented here, enjoying an eight-month uptrend out of its December lows for a gain of nearly 60% into the highs set in early June. A bit of profit taking has made the stock look attractive again as it rolls above its 50-day moving average. Merely a retest of the June highs would be worth nearly 10% from here.
KGC will next report results on Aug. 2 after the close. Analysts are looking for earnings of 2 cents per share on revenues of $828.6 million. When the company last reported on May 3, earnings of 2 cents per share beat estimates by a penny on a 1.7% jump in revenue from the year-ago period to $796 million.
Anthony Mirhaydari is founder of the Edge (ETFs) and Edge Pro (Options) investment advisory newsletters. Free two- and four-week trial offers have been extended to InvestorPlace readers.
