Gold and silver have been witnessing a rally over the past few months as an increasing number of people are trying to take refuge in safe-haven assets amid rising cases of coronavirus, fears of prolonged global recession and the ongoing uncertainty surrounding U.S.-China relation.
While gold price hit an all-time high on Jul 27, silver too will hit a six-year high anytime now. Besides the uncertainty over the global economy’s strength, another factor that has been playing a major role in silver’s rally is extra-loose monetary policies across the globe.
Silver Glitters More Than Gold
People have been flocking to gold lately as they are finding the yellow metal the best place to park their money during this time of market uncertainty. However, silver has been doing equally well and is not far behind the rally being enjoyed by the yellow metal. While gold hit an all-time high of $1,945 per ounce on Jul 27, silver managed to settle above the resistance at $23.25 and rallied toward $24.60.
The uncertainty over trade and coronavirus crisis has made investors park their money in silver, which is considered an alternative investment to risky assets.
Multiple Factors Aiding Silver Price
A weaker U.S. dollar index following massive liquidity injections by the Fed along with exceptionally low interest rates globally, technical buying, and increasing consumer demand from China and India have been fueling the bull run of silver.
Hopes of another round of economic stimulus from central banks and worsening U.S.-China tensions should continue to drive further growth in the white metal. Silver is also considered as an industrial metal, with 50% of the metal’s total demand coming from industrial applications. Hence, the gradual reopening of global economies and a pickup in manufacturing activity will act as as a tailwind to silver.
Moreover, growing demand in areas like 5G, solar panels and other electronic application, shifting focus toward green energy, and growth in computer shipment and demand for sensors used in IoT and OLED lighting will continue to help silver in the long term.
Stocks to Watch
Given this scenario, it would be prudent to invest in silver stocks that have great potential and are poised to perform in the coming days.
Fresnillo plc FNLPF is silver and gold mining and exploration company. It also produces lead and zinc concentrates, silver precipitates, gold and silver dore bars, and leases mining equipment.
The company’s expected earnings growth rate for the current year is 65.2%. The Zacks Consensus Estimate for current-year earnings has improved 81% over the past 60 days. Fresnillocarries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Alexco Resource Corp AXU is a precious metals’ exploration company with a silver focus and growing environmental services business. The company conducts mineral exploration in Canada, primarily in Yukon, and performs reclamation and remediation services at mine sites using its rights to certain patents and the expertise acquired by its officers
The company’s expected earnings growth rate for next year is more than 100%. Its shares have gained 41.2% over the past 30 days. Alexco Resourcehas a Zacks Rank #1.
First Majestic Silver Corp. AG is engaged in the production, development, exploration and acquisition of silver mines in Mexico.
The company’s expected earnings growth rate for the current year is more than 100%. Its shares have gained 49.5% over the past 30 days. Alexco Resourcehas a Zacks Rank #3 (Hold).
Fortuna Silver Mines Inc. FSM is engaged in the exploration, mining and development of silver and base metal properties in Latin America. Its core assets include the Caylloma Ag-Pb-Zn-Cu Mine located in Arequipa, Peru and the San Jose Ag - Au Project located in Oaxaca, Mexico.
The company’s expected earnings growth rate for the current year is more than 100%. Its shares have gained 49.1% over the past 30 days. Fortuna Silver Minescarries a Zacks Rank #3.
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