It’s not headline news that gold and silver stocks have been beaten by the general stock market thus far in 2012. Even with the bull rally from the end of 2011 low of $1,520 per ounce, the price of gold has “only” appreciated about 6 percent. Compare that to the Russell 2000’s nearly 10 percent return and the S&P 500’s return of 12 percent in the first quarter and you wonder what happened to gold and silver stocks.
The big question that is begging to be asked is, “Is it time to buy gold and silver stocks?“
It very well could be time to start digging into the research materials and charting gold and silver stocks again. It will be especially good timing if any of the following comes out to be true:
- the economy here in the U.S. shows further weakness as the year goes on;
- the collapse of the U.S. dollar against foreign currencies;
- QE3 is shoved down our throats by the Fed;
- inflation begins to show its evil wings and heats up in the third or fourth quarter; or
- central banks around the world keep buying or increase their buying of gold.
If any one of the five events listed above comes to fruition, silver and gold could potentially outperform equities before the end of the third quarter. Therefore, it only makes sense to consider buying gold and silver stocks conservatively if you truly want to own a diversified portfolio.
The best approach to buying gold and silver stocks right now would be a “phased approach,” meaning little by little to slowly gain exposure to them over a period of time by using a wide variety of strategies.
|SYMBOL||NAME||PRICE||% CHG 50-DAY MA||% CHG 200-DAY MA||% CHG 52-WK HIGH|
|AU||AngloGold Ashanti Ltd.||34.11||-13.44%||-20.62%||-34.01%|
|ABX||Barrick Gold Corporation||40.73||-10.19%||-14.41%||-27.20%|
|KGC||Kinross Gold Corporation||9.19||-11.98%||-25.53%||-49.64%|
|AUY||Yamana Gold, Inc.||14.82||-9.18%||-5.22%||-18.39%|
|GFI||Gold Fields Ltd.||12.84||-11.72%||-18.46%||-30.56%|
|SLW||Silver Wheaton Corp.||31.19||-10.89%||-6.07%||-33.84%|
|GOLD||Randgold Resources Limited||81.44||-21.59%||-23.57%||-32.54%|
|BVN||Compania de Minas Buenaventura SA||39.06||-2.68%||-3.17%||-21.01%|
|EGO||Eldorado Gold Corp.||12.84||-8.15%||-17.93%||-41.95%|
|HMY||Harmony Gold Mining Co. Ltd.||10.22||-12.55%||-17.23%||-35.03%|
|NGD||New Gold, Inc.||9.51||-8.50%||-12.96%||-32.79%|
|ANV||Allied Nevada Gold Corp.||30.18||-7.98%||-12.15%||-34.25%|
|PAAS||Pan American Silver Corp.||20.31||-11.37%||-17.68%||-52.72%|
|AUQ||AuRico Gold Inc.||8.62||-6.02%||-7.49%||-39.17%|
|AG||First Majestic Silver Corp.||15.72||-13.73%||-10.37%||-39.86%|
|HL||Hecla Mining Co.||4.28||-11.12%||-21.64%||-56.68%|
|SSRI||Silver Standard Resources Inc.||13.84||-11.12%||-15.39%||-61.49%|
|SVM||Silvercorp Metals Inc.||6.33||-9.92%||-15.89%||-60.63%|
Think Options: Options include physical gold and silver, gold and silver linked CD’s, gold and silver ETF’s, gold and silver mining stocks, and managed futures. You can’t turn on the television without seeing a commercial that is trying to entice you to buy gold or silver.
One of the tested techniques that is rarely discussed is managed futures. Whether its currencies, a collection of equity indexes, commodities, etc., managed funds are designed to perform during unsure and volatile times and they are not highly correlated to the stock market.
Savvy futures managers always use trending patterns and volatility to their advantage. With the stock market, silver and gold prices expected to continue to be volatile, this “phased approach” could be the most attractive method, especially managed commodity future funds.
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