In my experience, successful stock market investors have an optimistic long-term view that simply doesn't have an off switch. That doesn't mean we don't hedge our bets or take concrete steps to reduce risk and volatility. We do. But we also tend to have an abiding faith in the ability of entrepreneurs, businesses and capital markets to meet people's economic needs.
- Alexander Green, Best-selling Author and Investment Director for the Oxford Club
It's been challenging to be optimistic about precious metals stocks in recent weeks.
We await the Federal Reserve Open Market Committee decision on how and when to keep stimulating the quantity and velocity of money.
Every day the economic woes in Europe and the repercussions for the U.S. make it clear that many other Central Banks will be easing too.
You'd certainly be right if you said, "Gold and silver stocks are dogs!" Right now they're looking more like healthy "puppies" ready to grow up.
These are two companies that make a lot of money. Goldcorp enjoys a total cash position of over $1.81 billion and is selling at 1.5 times its book value.
Silver Wheaton is a silver "streaming" company, and it is the world's largest. It has grown their year-over-year quarterly earnings by over 126%.
Forbesrecently stated for the record that SLW is worth $40-a-share just on its fundamental drivers.
With a PEG ratio (5-year expected) of 0.65 it's a stock that could certainly double both its earnings and share price from here.
There are two very well run, strongly capitalized gold streaming-royalty companies that I encourage you to examine.
RGLD is on sale now at below $60-a-share. FNV looks attractive when it's below $40. Accumulate them carefully and after much deliberation.
If you like medium-size producers with low Price-to-Earnings ratios take a look at IAMGold (NYSE:IAG) and Hecla Mining (NYSE:HL).Here's a comparative 1-year chart on both companies that have been chronic underachievers.
Both IAG and HL have virtually no debt. IAG has $1.08 billion in Total Cash. That's $2.86 per share in cash.
HL has almost $267 million in cash, around 93 cents per share. Their book value is about the same as the share price, around $4 -a-share.
Both these companies should be looked at from the inside out. Hecla's web site gives abundant details and current plans.
Hecla will report first-quarter results at an undisclosed date in May. I'd encourage any investor to await these events before investing.
The Time to Get Excited About Precious Metals is Now!
Wouldn't it have been grand to have had the foresight to purchase Apple (NASDAQ:AAPL) stock in the last quarter of 2011 at around $350?
Wall Street and small investors were cautious and rather apathetic about Apple's future, especially when Steve Jobs passed away.
There's an extraordinary 2012 chart concerning gold miners you'll see by clicking here. Scroll down to the interview with James Turk to see it.
That's the way it is now with the precious metals sector. Investor sentiment is in the toilet and only people like Rick Rule are excited.
In fact, in a recent article titled "Why I'm Excited About this Gold Market," Mr. Rule made the following observations on gold stocks:
A cursory look at producers' income statements tells a dramatic story: earnings and cash generation, on a per share basis, are rising in dramatic fashion.
Capital expenditures are increasingly funded with internally generated cash rather than equity issuances or debt. In fact, even in the face of the gold equities decline, many gold producers are generating cash so fast that even after funding hefty capital budgets, they are able to return cash to shareholders in the form of stock buybacks and increased dividends.
The best time to buy gold and silver, as Casey Research likes to say, is "...when few are noticing, nobody wants them and apathy abounds."
With gold still at $1,640 and silver stubbornly holding its own above $30-an-ounce its hard not to be optimistic about the better producers and streaming-royalty companies.
As Winston Churchill said, "For myself, I am an optimist - it does not seem to be much use being anything else."