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My Favorite Gold/Silver Miners: Newmont And Pan American

Mar. 01, 2020 3:55 PM ETNewmont Corporation (NEM), PAAS, NGT:CA, PAAS:CA17 Comments
Paul Franke profile picture
Paul Franke


  • The sharp drop last week in gold/silver miners is creating better future upside for new investment.
  • Coronavirus disruption effects are leading to lower interest rates, more money printing, and eventually greater investor demand for the precious metals.
  • The odds of a hyperinflationary, record money printing event by central banks worldwide are increasing daily. Gold/silver ownership may become a necessary portfolio holding soon to conserve wealth.

I believe now is a good time to purchase many precious metals miners. The spillover effect of last week’s 15% global equity market decline has led to some profit taking in the high-flying miners. As I have written since November, gold, silver and platinum bullion ETFs have been the center of my attention and precious metals investments. The bullion ETFs looked like a better risk/reward proposition with the general stock market at all-time highs. As a consequence, I have kept my weightings in gold/silver miners lighter than usual since late summer, anticipating a stock market breakdown would initially hold their quotes at a lower level.

However, I think the 20-30% drop in the largest mining concerns of late has opened up smarter valuations and prices to start buying again. I purchased starter stakes in Newmont (NYSE:NEM) and Pan American Silver (NYSE:PAAS) on Friday. If the two continue lower in price in next week, my plan is to add shares in both. Here’s a short explanation why.

Runaway Money Printing in 2020?

I think my last Seeking Alpha article on the potential for hyperinflation money printing from a coronavirus pandemic related recession is my best rationale on why you need to own some gold/silver exposure going forward. After the brutal and extraordinary 7-day 15% decline in the Dow Jones and S&P 500, everyone is screaming at the Federal Reserve to print more money and bail out losing equity positions. The Treasury bond yield curve is officially inverted again, meaning we are at, or near, recession in coming weeks. If and when actual quarantines begin in America, and the global supply chain becomes truly fragmented, the FED may not have a choice but to print new money at record rates. It is entirely possible money creation (devaluation) will be at even greater rates than was necessary during the 2008-09 Great Recession, as debt levels

This article was written by

Paul Franke profile picture
Nationally ranked stock picker for 30 years. Victory Formation and Bottom Fishing Club quant-sort pioneer.....Paul Franke is a private investor and speculator with 36 years of trading experience. Mr. Franke was Editor and Publisher of the Maverick Investor® newsletter during the 1990s, widely quoted by CNBC®, Barron’s®, the Washington Post® and Investor’s Business Daily®. Paul was consistently ranked among top investment advisors nationally for stock market and commodity macro views by Timer Digest® during the 1990s. Mr. Franke was ranked #1 in the Motley Fool® CAPS stock picking contest during parts of 2008 and 2009, out of 60,000+ portfolios. Mr. Franke was Director of Research at Quantemonics Investing® from 2010-13, running several model portfolios on the Covestor.com mirror platform (including the least volatile, lowest beta, fully-invested equity portfolio on the site). As of April 2023, he was ranked in the Top 5% of bloggers by TipRanks® for stock picking performance on positions held one year. A contrarian stock picking style, along with daily algorithm analysis of fundamental and technical data have been developed into a system for finding stocks, named the “Victory Formation.” Supply/demand imbalances signaled by specific stock price and volume movements are a critical part of this formula for success. Mr. Franke suggests investors use 10% or 20% stop-loss levels on individual choices and a diversified approach of owning at least 50 well positioned favorites to achieve regular stock market outperformance. The short sale of securities in overvalued, weak momentum stocks as pair trades and hedges is also a part of the Victory Formation long/short portfolio design. "Bottom Fishing Club" articles focus on deep-value candidates or stocks experiencing a major reversal in technical momentum to the upside. "Volume Breakout Report" articles discuss positive trend changes backed by strong price and volume trading action.

Analyst’s Disclosure: I am/we are long NEM, PAAS. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.

This writing is for informational purposes only. All opinions expressed herein are not investment recommendations, and are not meant to be relied upon in investment decisions. The author is not acting in an investment advisor capacity and is not a registered investment advisor. The author recommends investors consult a qualified investment advisor before making any trade. This article is not an investment research report, but an opinion written at a point in time. The author's opinions expressed herein address only a small cross-section of data related to an investment in securities mentioned. Any analysis presented is based on incomplete information, and is limited in scope and accuracy. The information and data in this article are obtained from sources believed to be reliable, but their accuracy and completeness are not guaranteed. Any and all opinions, estimates, and conclusions are based on the author's best judgment at the time of publication, and are subject to change without notice. Past performance is no guarantee of future returns.

Seeking Alpha's Disclosure: Past performance is no guarantee of future results. No recommendation or advice is being given as to whether any investment is suitable for a particular investor. Any views or opinions expressed above may not reflect those of Seeking Alpha as a whole. Seeking Alpha is not a licensed securities dealer, broker or US investment adviser or investment bank. Our analysts are third party authors that include both professional investors and individual investors who may not be licensed or certified by any institute or regulatory body.

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Comments (17)

Gwashn profile picture
Good article.
I can't argue being bullish PAAS and NEM, but I'm skeptical about hyperinflation, which I've been hearing about for years.
Paul Franke profile picture
Hyperinflation is an outlier idea, and has a low, but growing probability of happening in the U.S. If/when it appears you had better own a lot of gold and silver. Buying some now hedges that risk in your portfolio. My fear is few small investors hold any gold/silver, and are totally unprepared financially for the potential of a sharp jump in inflation and interest rates.
OK, low probability, I can get on board with that. I'm long pm's via several miners, so I agree, a hedge is prudent.
Pan American Silver upgraded to Buy from Hold at Deutsche Bank Deutsche Bank analyst Chris Terry upgraded Pan American Silver to Buy from Hold with an unchanged price target of $22. The analyst cites valuation for the downgrade with the shares down 22% in the past week. Pan American has low levels of debt and offers exposure to both gold and silver, Terry tells investors in a research note.

Read more at:
Can a mining company be evaluated according to its reserves and resources (proven and probable) in gold and silver and if so, according to which formula?
For example, what percentage of the theoretical value of reserves at current prices of gold and silver?
Very good article. I loaded up the truck Fri, 2/28, when many high-quality precious metals stocks were down 15% or more in early trading. Anyone who initiated pm positions or added to existing positions last Friday will be glad they did. Who knows how pm prices will evolve this year, but for investors with a 3 - 5-year investment window, I expect many pm mining company stock prices will double in the worst case, most likely increase 3 - 4X, and smaller / more leveraged companies, including some explorers and developers could be 5 - 10 baggers.

I also think it's a great time to get into some base metals stocks as well as some hydrocarbon energy stocks.
Chuck53 profile picture
What's your opinion of AUY? I Have PAAS Jan 2021 17 calls & a lot of AUY Jan 2022 3 calls.
arok79 profile picture
would love to see PM plays take a nice hit with this market tank job. chance to load up cheaper. PMs are going to fly high
arok79 profile picture
Gold silver down big again looks like for tomorrow’s market open. Might get a good deal on PAAS. i owned a couple miner but got out too early. Looking for better entry points to get back in.
Reading61 profile picture
GLD is 25 in the premarket
Look again
Stoneclone profile picture
Loving NEM and PHYS! Must be all that "money to hold"!
afistfulof$ profile picture
At 6:10pm Sunday, I'm seeing FNV, ELYGF, UGLD, ticking up slightly (+0.10%) in pre-market trading. I'm still holding minuscule positions, <$50 in those along with PAAS, MTA, AEM, SSRM, KL, AUY and HL. The small positions remain after hitting 1st and 2nd stops about a week ago, just to remind me to keep track of PM miners, daily or hourly, in these volatile times. I've studied the period 2008-09 to refresh me on the sequence of sector drop-offs during that period as shown in momentum charts.

In Oct, 2008, the S&P had completed it's 1st plunge, down ~ -30%, while GDX (mining indicator) had at 1st plunged ~ -65%. Very sobering. But GLD and GDX's fortunes reversed and climbed after that, rising as the S&P fell further to -48% at it's bottom in March 2009. GDX had made up it's loss by the autumn of 2009, rising ~ +68%. That's what I'm holding and waiting for. We could be there now or later.

Frankly, now I feel like I've got a blue crab or herring for bait set out, bottom fishing on a tarpon fishing trip, waiting in anticipation of a nibble or bite, then a hook-set, followed ultimately by a "silver king" leaping out of the water several body lengths, showering spray and clacking his gills as it gyrates nose touching his tail ... Exciting times they were, waiting, hopeful for a man-size tarpon ... like today waiting for gold and gold/silver miners/streamers to rise up again. Thanks for the article on PAAS, Paul. Much respect to you.
good report and I like NEM...PAAS is in geopolitical shaky area jmho….these two companies, as do others, need to hold above the 200 day mav which is not that far away....
Good article. I’m long both. And they’re staples. Along with AEM/KL which haven’t been great as of late but I reckon will do fine (especially KL).
My spec pick is FSM. Huge reserves in Argentina and I think the upside is big. But certainly not a blue chip.
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