You wouldn’t know it from looking at the Dow Jones index, which gained nearly 7% this month, but many investors are understandably worried about the markets and the underlying economy. While U.S. relations with key international partners are running at a historic low, an increasing number of investors are considering gold stocks. After all, the spot price of the yellow metal has soared since the end of May.
I don’t find that surprising. According to The New York Times, global economic conditions were already sour without the Trump administration’s aggressive foreign policy. But with President Donald Trump’s hard-line approach, ongoing tensions like the U.S.-China trade war have added fuel to a simmering fire.
And it’s not just the top two economic powers going at it: the conflict has chilled business sentiment everywhere. As we all know, fear helps drive gold stocks.
But if you’re concerned about your portfolio, gold isn’t your only option. Though considerably more volatile than its revered cousin, silver bullion is incredibly undervalued right now. For instance, you can exchange one troy ounce of gold for over 90 troy ounces of silver. Earlier in the decade, the gold-silver ratio stood around 50-to-one, outlining the current bull case for silver stocks.
Finally, markets often work in cycles. As things stand, the equity sector has gone on a record rally. To many analysts like myself, a correction is not only natural but healthy.
On the other hand, gold stocks have incurred years of consolidation and frustration. Based on both timing and a favorable environment, investors should consider precious metals.
With that in mind, here are five gold and silver stocks to buy now:
Silver and Gold Stocks to Buy: Barrick Gold (GOLD)
The precious metals mining companies sector has a reputation for volatility, so you should never put all of your eggs in one basket. Instead, diversify your exposure to gold stocks. Part of that strategy involves going with the big guns, and there’s no one bigger than Barrick Gold (NYSE:GOLD).
With a market capitalization just under $28 billion, GOLD stock is this sector’s flagship organization. I don’t see that changing anytime soon. Barrick operates mining projects in several resource-rich regions, including North and South America, Africa, and Australia.
Plus, gold prices are rising and that trend will likely sustain itself. This tailwind is arriving at the perfect time for GOLD stock. In its first-quarter earnings report, Barrick generated $2.1 billion in revenue, up 17% from the year-ago quarter. Q1 also saw the return of positive earnings.
Kirkland Lake Gold (KL)
Sometimes, the difference between success and failure is leadership. Case in point is Kirkland Lake Gold (NYSE:KL). A few years ago, KL stock was hardly a hot commodity. In fact, it was one of the smaller gold stocks and struggled mightily for traction.
But that was before renowned gold expert Eric Sprott became both chairman and a sizable shareholder. With the influx of money and business acumen, Kirkland Lake set to work acquiring gold stocks that made strategic sense. The company also lucked out on mining projects that hit pay dirt.
Today, Kirkland stock is among the biggest mid-tier names in the sector, featuring a market capitalization of over $8 billion.
It’s also no surprise that thanks to a shuffle in management, KL stock lacks the choppiness found in other gold stocks. Instead, shares are decisively on the bullish pathway, gaining 69% year-to-date.
First Majestic Silver (AG)
The official tagline for First Majestic Silver (NYSE:AG) tells you where the company’s mind is: “one metal, one country.” It’s rare among silver stocks to advertise their mission statement so boldly. Silver is a byproduct of base-metal mining, usually for copper, lead, and zinc. While First Majestic does extract other commodities, its primary focus is silver.
Naturally, this makes AG stock the most direct play to the white metal. Because let’s face it: collecting silver coins is fun and all, but those things get heavy and cumbersome. At a certain point, buying mining shares makes more logistical sense.
Moreover, I think AG stock stands out for its exposure to a relatively stable market in Mexico. Yes, First Majestic is technically placing all its eggs in one basket here, however, despite a testy relationship between the U.S. and Mexico, I doubt AG faces geopolitical risks.
Mexico is simply too dependent on the American economic machinery. This benefits AG shares, along with other silver stocks.
Pan American Silver (PAAS)
Concerned investors often flock to gold for protection. Those who want to gamble a bit will throw some fiat currencies toward silver bullion, and those who really want to go all in wager on silver stocks like Pan American Silver (NASDAQ:PAAS).
PAAS stock is currently correlated with the silver spot price, but in a bad way. While silver is down nearly 4% YTD, PAAS has lost as much as 29%. However, shares have apparently stopped the bleeding in late May. For this month, the embattled mining company is up 8%.
Now, that doesn’t mean PAAS stock is guaranteed to move higher. Silver stocks probably helped conceive the phrase, “this time is different.” And boy, have I ever looked dumb using that aphorism in the past!
But with so many economic and geopolitical pressures driving investors’ fears, I have a strong feeling that yes, this time is different.
Sibanye Gold (SBGL)
Gold stocks garner the most attention today among precious metals because of their safe-haven status. And the gold-silver ratio is a particularly compelling metric because it gives investors a chance to buy an undervalued asset in an increasingly popular market. The real absurdity now is platinum, which is one of Sibanye Gold’s (NYSE:SBGL) specialties.
When Evgeni Plushenko of Russia lost the men’s figure-skating gold medal to American Evan Lysacek, he was furious. Shortly thereafter, Plushenko declared himself the winner of the platinum medal. The implication was clear: platinum is much rarer and therefore more valuable than gold.
I wonder how Plushenko would have felt had the Olympics occurred today. At time of this writing, platinum trades just above $800. Gold, on the other hand, trades at $1,350. The situation will surely correct itself, and when it does, SBGL stock could fly even higher than it already has.
As of this writing, Josh Enomoto is long gold, silver, and platinum.