Some investors are taking the view that a strong breakout in gold and silver miners is flagging up opportunities for gains in the mining sector over the coming months and even further into the future.
Tools can help with following prices and company news like those at learn about Money Morning. And in terms of developing a strategy for staying on top of the market, here is a look at what factors to consider if you want to try and achieve that aim.
Balance sheet clues
If you are trying to pick out the future winners from the losers, a company’s balance sheet is not a bad starting point when you are carrying out some analysis.
It is certainly worth taking a look at which miners have a strong balance sheet, as there has been a fair amount of activity in the sector recently. Although any company mentioned should not be viewed as a recommendation in any way, companies such as Endeavour Mining, Oceana Gold, Alamos and Condex are a few examples of miners who have some financial muscles to flex.
A fair amount of money is currently being raised in order to finance some new projects and expand existing ones, which is a positive sign of relative strength in the precious metals market, despite some challenging economic factors.
Silver bullion against mining stocks
It is fair to say that in recent times, silver stocks have ruled the roost in comparison to how well silver bullion has fared, although bullion has recovered a bit of ground since, to try and restore an element of parity.
If you are concentrating your efforts on silver stocks in particular rather than looking at gold miners too, there are some points to be mindful of. In particular, you should remember that there are a few silver stocks who carry the word silver in their trading name, but don’t actually get to produce any silver at all.
Do your research and maybe considering focusing on stocks that have clearly demonstrated an ability to be able to produce physical silver, or are at least close to that point.
Companies who currently fit that bill, include Great Panther Silver, Bear Creek Mining Corporation and Tahoo Resources, who lay claim to having the highest grade silver in the world at this point in time.
Again, these companies are highlighted to give you an indication of the sort of profile that it may be worth looking at investing in silver miners over bullion.
Outlook for gold ETFs
ETFs are continuing to gain traction as a viable way of gaining exposure to gold and silver miners, so if you are looking to get involved, you may be wondering what the outlook is over the next few years.
Some analysts are quite bullish about the prospects for gold miners, and there have even been some bold predictions that gold miners could enjoy a healthy rise in value and outperform physical gold as a result.
If you take a what-if scenario where gold rises to somewhere close to the $1,700 levels seen previously, the scale of that rise from the lows witnessed in the early part of 2016, would potentially see gold shares rise as much as three times more than physical gold.
Financial markets and prices are all about opinions and sentiment, so there is absolutely no guarantee that these predictions hold any credence, although anything close to these predictions could see you some enjoy some healthy returns via your exposure to gold through an ETF.
Software to help make your tasks easier
It is worth mentioning that you could make your trading tasks and research more insightful if you make use of some of the technical analysis trading software available.
You will find that the vast majority of brokers now offer free or premium trading software apps and if you have access to one like MetaStock Trader for example, you will be able to make use of over 300 technical indicators and filtering options, all of which could help you to pinpoint potential trades that meet a criteria that you have applied.
Whatever software or apps that you use, the fundamental point about the current state of gold and silver miners in general, is that there are seemingly some stocks that have the capacity to shine over the next few years, all you have to do, is find those winners.
Sophie Simmons started her investment portfolio when she was 21, having learned most of what she knows from her Grandfather. Since those early days she has gained a lot of experience and enjoys sharing her knowledge and tips with those just starting out.