Gold mining stocks are publicly traded companies that specialize in gold mining. Typically, when the price of gold rises, the stock prices of gold mining companies may also increase, sometimes even more significantly. This is because there is a leverage relationship between the price of gold and the operations of gold mining companies. Currently, the top three companies in terms of market capitalization in this industry are Newmont Corporation (NEM), Agnico Eagle Mines Limited (AEM), and Barrick Gold Corporation (GOLD).
Warren Buffett has pointed out that while gold is shiny and attractive, it is not a productive asset. Despite recent price declines over the past few trading days, gold should be considered a cornerstone in any diversified investment portfolio, aimed at long-term hedging against various risks. This year, gold prices have been very strong overall.
When the price of gold drops by 3%, it may be a good time to purchase both gold and gold mining stocks. However, towards the end of the year, silver could potentially be a more profitable precious metal. In fact, during the surge in precious metal prices, the increase in the price of silver has exceeded that of gold.
Up until now this year, the price of gold has risen by 16%, showing impressive momentum. With the Federal Reserve nearing its first rate cut, this upward trend may continue. Meanwhile, as of now this year, the price of silver has risen by over 23%.
Actually, silver has been the standout performer among the two metals so far this year. But is its impressive run set to continue into the second half? Only time will tell. Nevertheless, silver seems to have more upside potential from current levels. At this crucial juncture, silver mining stocks appear most appealing and poised for an upswing in the latter part of the year.
First Majestic Silver (TSX: AG) appears to be quite affordable, with the stock price having recently dropped more than 63% from its high point in early 2021. The company recently changed its stock ticker to the more fitting “AG,” which is the elemental symbol for silver. With a price-to-sales ratio of 3.3, this silver mining stock seems to be an excellent value proposition. However, given its high beta coefficient of 1.4, one should be prepared for significant volatility.
