Silver prices are soaring in 2024, making it a prime time to consider which silver stocks to buy. Propelled by a combination of factors, including safe-haven demand due to escalating geopolitical tensions, expectations of U.S. interest rate cuts, speculative buying and a surge in industrial metals, silver price is up 15% year-to-date.
The commodities sector, particularly metals, is experiencing notable gains in the second quarter due to significant re-rating that is occurring in the prices of gold, silver and copper. Silver price movement has historically differed from gold due to its dual role influenced by both investment and industrial demand, which contributes to its price volatility.
Expectations of a U.S. rate cut are also shaping the market, as lower interest rates may encourage borrowing and spending, potentially spurring industrial growth. Such an economic environment could lead to an increased demand for silver, further driving up its price.
Global economic challenges, including higher interest rates, the conflict between Israel and Hamas and the ongoing war in Ukraine, are impacting the growth outlook negatively. These issues often lead to a rise in silver demand, as the metal is sometimes seen as a hedge against inflation.
The current momentum-driven buying in the silver market is expected to continue in the short term, supported by a strong rally in gold. Anticipated interest rate cuts, geopolitical tensions, and persistent inflation concerns are likely to maintain firm silver prices, although achieving new lifetime highs in key international markets appears less certain.
Citi (NYSE:C) strategists recently noted the remarkable resilience of precious and industrial metals like silver, even in the face of a strengthening U.S. dollar and interest rate fluctuations. They predict the rally in gold, silver and copper could extend by 5% to 10% in the next 0 to 3 months and potentially 15% to 20% over 6 to 12 months. Given these predictions, savvy investors might start looking at silver stocks to buy as they see silver prices potentially hitting the $30 to $32/oz range.
Newmont (NEM)
Primarily known for gold mining, Newmont (NYSE:NEM) also engages in silver production, mainly as a byproduct. Exposure to silver prices is limited but still relevant to their overall mining revenue, especially in operations where silver yields are significant alongside gold.
The company’s stock surged in April after first-quarter earnings exceeded Wall Street expectations, driven by increased gold production, higher market prices and reduced operating expenses.
NEM stock hit a nine-month peak, supported by successful production outputs and strong market conditions. Gold production increased significantly, rising from 1.3 million ounces a year earlier to 1.7 million ounces.
The company is also progressing with its strategy to streamline operations and reduce debt, following the substantial acquisition of Australian miner Newcrest for approximately $17 billion last November. That strategy includes the sale of six non-core assets.
Pan American Silver (PAAS)
Pan American Silver (NYSE:PAAS) is a leading primary silver producer that has significant exposure to silver prices. Its operations, spread across the Americas, focus heavily on silver, making its financial performance closely tied to the volatility and trends in silver market prices.
Pan American Silver recently said it expects an output of 21 to 23 million ounces for the full 2024 year, compared to the Bloomberg consensus estimate of 25.35 million ounces. Despite the shortfall in silver production estimates, the company’s gold production guidance remains steady, ranging from 880,000 to 1 million ounces, closely aligning with the analyst estimate of 940,000 ounces at the midpoint.
The stability in gold production could help offset some of the negative impacts of the silver production miss on the company’s overall financial performance as PAAS remains a pure-play silver play.
Reviewing the fourth-quarter results, Pan American Silver reported a silver production of 4.84 million ounces. Gold production came in at 268,000 ounces against an estimate of 265,656 ounces. The company reported a revenue of $669.6 million for the quarter, above the estimated $661 million.
BHP Group (BHP)
As a diversified global resources company, BHP Group (NYSE:BHP) mines silver, primarily as a byproduct of its copper and lead-zinc operations. The company’s exposure to silver prices, while not its core focus, adds a supplementary revenue stream that fluctuates with market prices. That makes BHP one of the silver stocks to buy for investors looking for diversified exposure in the mining sector.
The company’s stock pulled back recently, offering an attractive entry point. The correction occurred after miner Anglo American (OTCMKTS:NGLOY) announced it had received an unsolicited all-share merger proposal, following a Bloomberg report that BHP was exploring a potential offer. Anglo American stated that BHP’s proposal depended on Anglo first divesting its South African platinum and iron ore divisions.
That way, BHP is looking to boost its copper holdings, critical for the energy transition, by proposing a $38.8 billion takeover of Anglo American. If successful, the deal would position BHP as the world’s largest copper producer, commanding approximately 10% of the global mined copper supply. In addition to offering exposure to silver prices, BHP also offers extremely good exposure to rising copper prices.
On the date of publication, Shane Neagle did not hold (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
