Mining for Value in Gold and Silver Stocks

Gold and silver have recently pulled back along with the stock market; nevertheless, several leading advisors and contributors to MoneyShow.com still consider the precious metals and related mining stocks as safe havens that could be poised for a long-term bullish run. Here are 11 ideas in the sector. Peter Krauth, Silver Stock Investor Silver, along with silver stocks, has been on fire. The reasons are essentially the same as for gold's rally. The Fed started to taper its bond purchasing, the latest inflation numbers from the U.S. at 6.2% annually are the highest in 30 years, and Biden's $1.2 trillion infrastructure bill has just passed. For its part, silver has been acting very well since late September. It appears to have formed an inverse head-and-shoulders pattern, with the shoulders marked in green and the neckline in blue. Once silver can hold above the $25 neckline, it will likely start to form a new support level, from which silver will rally higher. After that, my targets become $26, $26.50, then $28. The ultimate prize will be $30. From there it could be fireworks as silver should be able to soar on its way to $50. Right now silver is not overbought, so I think it has room to run higher. Wheaton Precious Metals announced record revenue, earnings and cash flow for the first nine months of 2021. The company report over $200 million in operating cash flow during the third quarter and a record $650 million in the first nine months of the year. It had $269 million in revenue during the third quarter and a record $923 million in the first nine months of 2021 -- and $137 million in adjusted net earnings during the third quarter and a record $460 million in the first nine months of 2021. Wheaton is performing well and should keep growing as the silver bull market progresses. Attractive to accumulate on weakness. Pan American Silver said it had generated record quarterly revenue of $460.3M, and operating cash flow of $157M in Q3. Cash and equivalents were $315.4M. Consolidated silver production was 4.8M ozs, gold was 142,600 ounces. Net income was $20.2M, while adjusted net income was $37.8M. PAAS has risen steadily in the past 6 weeks, and I think that will continue. Attractive to accumulate on weakness. Endeavour Silver reported Q3 financials. It's worth noting that EDR continued to withhold metals sales in Q3 as they felt prices were temporarily low. That has dented earnings, but those will likely be sold before year end, helping to boost the full year's sales. Net revenue was $34.6M, with cash costs of $8.16/oz. and all-in sustaining costs of $17.46. Cash flow was $7.7M. The balance sheet is healthy with $101.1M. EDR has bounced back nicely with silver and looks attractive to accumulate on weakness. First Majestic Silver reported Q3 financials. Like Endeavour, First Majestic withheld 1.4M ozs. of silver to maximize future profits. FR also expects to recoup and improve profits in the next few quarters should this inventory be sold at higher prices. Had the company sold these ounces at the end of the quarter it would have generated approximately $33.2 million in additional revenue using the quarterly average realized price of $23.10 per ounce. First Majestic has seen a muted rally, much like Endeavour. Attractive to accumulate on weakness. Omar Ayales, Gold Charts R Us Equinox Gold Corp. remains on a bullish upward path. It rose to a new high for the move, to the top side of the Aug upchannel, approaching key resistance at the Aug 2020 downtrend near $9.50. The leading indicator is breaking out; this suggests momentum is picking up steam and it could push EQX above its resistance level. EQX will remain strong above the August uptrend near $7. On the downside, EQX's key support level is confirmed at $6. Keep your positions as long as EQX holds above this level. Harmony Gold Mining is also looking great! It regained the $4 handle and it's looking ready for more upside. HMY's next key resistance is at the August 2020 downtrend near $4.50. A break above this level and it's off to the races! The leading indicator below is also looking strong, ready to breach a resistance of its own. The stock is very strong above the September uptrend near $3.75. I'm now overweight and will continue to hold onto our position as long as HMY holds above its deeper support at $3 -- the June 2020 lows. Hecla Mining rose to the recent September 2021 highs near $6.50. The indicator below is picking up steam with room for more upside. The indicator suggests HL could rise further in the short term. HL must now break above $6.50 on a two-day close to show renewed strength that could push it to the June highs near $9.50. On the downside, the October uptrend near $5 held during Sept-Oct weakness. Keep your positions as long as HL holds above this level. Osisko Gold Royalties confirmed bullish support at the October uptrend near $12.50 by rising to a new high for the move. The stock's leading indicator is picking up steam, showing strength, suggesting OR could now rise to the June highs near $15. Keep in mind, OR's deeper support is at the March uptrend near $11. Keep your positions as long as OR holds above the lower support. Bruce Kaser, Cabot Undervalued Stocks Advisor Barrick Gold , based in Toronto, is one of the world's largest and highest quality gold mining companies. About 50% of its production comes from North America, with the balance from Africa/Middle East (32%) and Latin America/Asia Pacific (18%). The market has little interest in Barrick shares. Yet, Barrick will continue to improve its operating performance (led by its new and highly capable CEO), generate strong free cash flow at current gold prices, and return much of that free cash flow to investors while making minor but sensible acquisitions. Barrick continues to boost production through mine upgrading and re-openings, capital spending remains restrained. Barrick is looking for acquisitions in Canada but said it will remain careful about valuation. The balance sheet and free cash flow remain strong. As the shares appear to have bottomed out for now, this might be a good time to buy more Barrick shares. Fundamentally, the company is doing well and has solid leadership, quality mines and a very strong balance sheet. It might take a long time, but we remain confident that eventually the shares will hit our $27 price target. On its recurring $0.09/quarter dividend, GOLD shares offer a reasonable 1.7% dividend yield. Barrick will pay an additional $0.42/share in special distributions this year (no clarity on 2022 special dividends), lifting the effective dividend yield to 3.8%. Adrian Day, Global Analyst Agnico Eagle Mines Ltd. has long been regarded as one of the higher quality names among the major miners, with consistently solid management, strong balance sheet. It is ranked as the eighth-largest gold mining company in the world by production. Now it has announced plans to combine in a so-called merger of equals with Kirkland Lake , a newer and rapidly growing company. The combined company would be third largest in the world. What will the new company look like? Kirkland and Agnico are not dissimilar companies, each with a solid balance sheet, strong management, and good political risk profile. They are the only two companies to have increased reserves and production (per-share basis) over last 10 years through investment in exploration. Agnico said the purpose of the merger was to make a better company, with a focus on making money on a per-share basis. The company will retain the name of Agnico, the larger company (approximately $15 billion market cap to Kirkland's $10 billion). The combined company will see 75% of its production from Canada and most of the rest from Australia and Finland, giving it the best political risk profile by a long way. Agnico, of all the majors, has long had a focus on exploration, including joint ventures with, and investments, in juniors. This year it is spending $160 million, more than any other year in its 60-year history, which includes on its pipeline, on brownfield projects, and on grassroot exploration. Nunavit and Finland are the two regions getting the bulk of spending this year. The merger will require the approval of both sets of shareholders, with the transaction expected to be complete in the first quarter of 2022. It will have an appeal to generalist investors because of its quality: cash flow, balance sheet, political risk profile, and track record. The stock is down from highs around $80 during the third quarter of last year. We are buying, not in expectations that this will necessarily be the best-performing gold stock in the next few years, but one with the surest upside and least downside. Royal Gold had a very strong quarter with volume, revenue and cash flow records. Silver was received from Khoemacau, where Royal also just increased its stream to 90% of the silver produced at this copper mine in Botswana. The ramp-up in coming quarters will see increased revenue, and the mine is expected to be a strong contributor to revenues for a couple of decades. The quarter was also helped by some catch-up of deferred silver from Pueblo Viejo, though gold production at the mine was down. Another paydown on the revolving credit facility left Royal with $60 million of cash, and $50 million outstanding debt, as well as available credit of $950 million. The new global minimum tax will have less impact on Royal than its Canadian peers since Royal, a U.S. company, was already paying U.S. tax on its offshore streaming income, currently at a little over 13%. Royal is trading at multiples lower than the other large royalty companies and with a better near-term growth profile as Khoemacau ramps up, and further out from IAMGOLD's new Cȏté project in Ontario. You can buy at this level.

Mining for Value in Gold and Silver Stocks

Experts select their favorite precious metals and mining stocks, which could be poised for a long-term bullish run.

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