Precious Metal Picks: 9 Stock Favorites in Silver and Gold

After declining for much of the year, gold has bounced higher in recent weeks and several leading advisors and contributors to MoneyShow.com are optimistic that better times are ahead for gold and silver miners. Here's a look at nine ideas that offer exposure to the precious metals mining space. Mark Skousen, Home Run Trader Is there anything out there that is still inexpensive? Indeed, gold is cheap. And so are gold shares. There are seven key reasons why gold, the barbarous relic, has long been sought after as a store of value: 1) Unlike wheat, corn or rice, it is durable. 2) Unlike artwork, it is divisible. 3) Unlike lead or copper, it is convenient. 4) Unlike real estate, it is identical. 5) Unlike paper, it possesses intrinsic value. 6) Unlike aluminum or copper, the supply is greatly limited. 7) Unlike, say, molybdenum or rhodium, it has a long history of acceptance as money. Last, but not least, gold is far more stable and less volatile compared to Bitcoin and other cryptocurrencies, which have been suffering from one crisis or another (the FTX scandal being the latest). However, gold is unique in other ways that make it a tricky investment. Unlike cash or bonds, gold doesn't accrue interest. Unlike a business, it does not generate earnings. Unlike a stock, it does not pay dividends. And unlike real estate, it does not generate rental income. That makes gold difficult to assess even under the best of circumstances. The decline in gold -- despite the highest inflation in 40 years -- has also pressured gold shares. But here, we can use traditional value metrics. And gold stocks are now inexpensive relative both to their traditional valuations and to the price of gold itself. One of the best ways to play this is with Newmont Mining Corp. . With a market cap of $37 billion, Newmont has mining operations in the United States, Australia, Peru, Indonesia, Canada, New Zealand, Ghana and Mexico. Approximately 70% of its mines are in North America and Australia, giving the company less political risk than most gold miners. In 2019, it acquired Goldcorp, gaining new mines, new people and more assets. It now has more than 100 million ounces of proven and probable gold reserves. It also produces silver, copper and zinc, and runs a merchant banking operation. The stock is inexpensive at just 17 times prospective earnings estimates for the next 12 months. I expect earnings per share to rise from $2.24 this year to more than $3 in 2023. And that's if there is no increase in the price of gold. With all-in costs of $1,150 per ounce, profits will grow dramatically with an uptick in the price of gold. And you'll earn a 4.73% dividend while you wait. This is an undervalued gold play with strong management, excellent prospects and plenty of upside potential. So, buy Newmont Mining at market. And place a sell stop at $37 for protection. Peter Krauth, Silver Stock Investor Silver has already spent considerable time oversold and with very negative sentiment. Meanwhile, physical silver markets remain very tight. As the next silver bull market starts to regain strength, I think the opportunity will be across the silver investment spectrum, from physical to large producers and royalty companies, to mid-tier producers, developers and junior explorers. There's a serious dearth of new silver mines being brought into production. That's only going to exacerbate an already very tight market that's forecast to continue for the next several years at least. I see a growing opportunity, especially in junior explorers. That's because many larger producers are not doing a great job of replacing depleting silver reserves. And yet they're generating plenty of cash. They are going to need to start looking seriously at developers and explorers who have attractive deposits to replenish their ounces. Endeavour Silver reported Q3 results. Strong performance helped reaffirm production guidance. Higher grades at Mexico's Guanacevi helped maintain guided production costs per ounce. Revenues were $40M, with some metal being added to inventory rather than being sold at low prices. Cash remains at $69M and $101 in working capital. They missed analyst estimates by about 8% for revenues and earnings per share. Profits are likely being pressured by inflation. The stock appears to have bounced from its September lows and is leveraging silver prices higher. The stock is attractive to accumulate on weakness. First Majestic said ongoing exploration at Jerritt Canyon in Nevada recently returned an impressive 19.97 g/t gold over 20.9m just 80m from active underground mining. Q3 results generated record production of 8.8M silver equivalent ounces, up 21% over Q3, 2021, and consisted of 2.7 million ounces of silver and 67,072 ounces of gold. Revenues were up 28% to $159.8M, operating earnings were $3.3M, down 5% and cash flows before movements in working capital and taxes were $27.7M, up 23% over Q3, 2021. Cash costs were $13.34 per AgEq ounce and AISC were $17.83 per AgEq ounce, down 5% and 11% respectively over Q3, 2021. FM is well off its July lows, and is attractive to accumulate on weakness. SilverCrest Metals just declared commercial production at its Las Chispas Mine in Sonora Mexico as of November 1. I recently chatted with management and came away realizing just how exceptional this asset is. Achieving commercial production is a huge milestone and could well kick off a rally in the share price. Attractive to accumulate on weakness. Brien Lundin, Gold Newsletter The hard truth is that with the federal debt at high levels (and headed higher), we simply can't tolerate interest rates at current levels or higher. Recent experience argues that the reaction to a shift in Fed policy will be explosive. Which brings me to an important point: If we pick the absolute bottom, it will be only due to luck. So, we can't count on hitting it exactly, and should instead focus on buying value when it's truly irresistible. And that time is now. Silvercorp announced operating results for its Q2 fiscal 2023. For its most recent quarter, the company's mines generated 1.8 million ounces silver, 1,200 ounces gold, 18.0 million pounds lead and 6.0 million pounds zinc. The totals for silver, gold and lead represented increases of 6%, 50% and 2%, respectively, from the same quarter last year. The zinc total was a 20% decrease from Q2 fiscal 2022. In addition, Silvercorp has completed 56,803 meters of drilling in 416 holes on the LMW mine within the company's flagship Ying Mining District in China. The company has now received assays for 378 of those holes. Key takeaways from this work include the discovery of high-grade silver-lead-zinc veins to the west of LMW's current mining areas and a new gold structure on the east side of the re-source area This aggressive exploration work is typical of Silvercorp, which despite strong production from Ying, continues to plumb the district for more silver-lead-zinc and gold resources. Given my long-term bullishness for silver, Silvercorp Metals remains a strong buy. i-80 Gold represents an outstanding opportunity; the junior miner has made a potentially game-changing discovery on its Ruby Hill property in Nevada. The original discovery hole at Hilltop was released in late August and the follow-up holes also hit impressive widths of world-class, polymetallic mineralization. These are fantastic intercepts. They are indicative of a style of mineralization that can often occur in clusters, like pearls on a string. If that proves to be the case here, and the grades hold up with further drilling, Hilltop could wind up hosting a multi-million-ounce, gold equivalent deposit. With this huge upside at Hilltop adding to an already impressive collection of gold assets in Nevada, i80 Gold continues to be one of our better bets for a re-rating once we get a sustained normalization in sector valuations, and regardless as it continues to advance its exploration and development plans. It's a buy. Adrian Day, Adrian Day's Global Analyst Wheaton Precious Metals saw sales somewhat down, partly a reflection of two modest streams terminated during the quarter, and partly a matter of timing of sales. Ongoing bottlenecks affected sales, though these are being cleared up. One major positive was the report that the phase III at Vale's Salobo mine in Brazil is now 98% complete. Other development projects appear on track, while a handful of new mines are scheduled to begin construction in 2023. Given that the last two quarters saw weak results at Salobo, which is Wheaton's largest single asset, there had been concern that the expansion was being delayed. The company has nearly half a billion in cash, no debt, and $2 billion on an unused line of credit. A strong multi-year growth profile, rock-solid balance sheet, and conservative management make Wheaton a top pick. Royal Gold had pre-released sales, which showed a minor miss of estimates largely due to a weak quarter at the Cortez in Nevada. The company is on track for strong end of year. Access to high-grade ore at that mine is now expected this quarter and will help Royal with a strong end to the year. The company is maintaining is full-year guidance. This quarter is also expected to include first royalties from its new Cortez royalty, which were not factored into the company's full-year estimates. Note that Royal has two royalties on Cortez. In addition, the Khoemacau copper mine in Botswana, on which royal has a silver stream, expects to have completed its ramp up by the end of this year or early next. Most importantly, the mine life of oft-troubled Mount Milligan, Royal's largest asset, has been extended another four years to 2033. Average annual production is projected at 175,000 oz of gold and 68 million lbs of copper. Royal has streams on both metals. Royal has $122 million cash and about $550 million available on its credit facility after paying down another $50 million during the quarter. It intends to pay down debt further from ongoing cash flow. Royal has some quality assets and near-term growth. It is a buy at this price. 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%). Barrick will continue to improve its operating performance (led by its 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's balance sheet has nearly zero debt net of cash. Major risks include the possibility of a decline in gold prices, production problems at its mines, a major acquisition and/or an expropriation of one or more of its mines. The company's financial and operating condition remains strong but its underlying profitability is not as healthy as we had anticipated, even excluding the weaker gold price. While the Fed hasn't changed the pace of its strident rate hike campaign, the favorable inflation reports point to an eventual slowing and stopping of the rate increases. This is favorable for gold. Investing in gold-related equities is a long-term decision -- investors shouldn't allow near-term weakness to deter their resolve. We are staying with the Barrick position as it remains a well-managed company, is well-positioned to benefit from an eventual rebound in gold prices, has a solid balance sheet and pays a respectable base dividend that appears sustainable.

Precious Metal Picks: 9 Stock Favorites in Silver and Gold

Leading advisors present their favorite ideas that offer exposure to the precious metals mining space.

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