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The price of silver has broken to the upside since the beginning of the year, rising by around 26% to over $33 per ounce. For years, investors and analysts, including myself, have viewed silver as an ideal hedge
Pan American Silver: Profit Outlook Surges As Silver Breaks Higher
Summary
- Silver's breakout and Pan American's acquisition of MAG Silver position PAAS for near-term profit growth, especially given mining cost stabilization.
- PAAS appears undervalued on forward cash flow metrics, with a strong immediate outlook, assuming silver and gold prices rise, and energy prices do not increase significantly.
- Long-term, rising energy and labor costs threaten miners' margins, making PAAS less attractive than the silver and gold ETFs for multi-year horizons.
- I am bullish on PAAS for the short term, but prefer SLV and GLD for longer-term inflation hedging due to commodity cost risks, especially from oil.
Harrison is a financial analyst who has been writing on Seeking Alpha since 2018 and has closely followed the market for over a decade. He has professional experience in the private equity, real estate, and economic research industry. Harrison also has an academic background in financial econometrics, economic forecasting, and global monetary economics.
Analyst’s Disclosure:I/we have a beneficial long position in the shares of SLV,GLD,USO either through stock ownership, options, or other derivatives. 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.
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