Are Gold and Silver Headed for a a Multi-Year Rise?

By Staff Writer / December 25, 2020 / Article Link

Gold futures ended higher Wednesday, with the precious metal halting a three day decline, as the U.S. dollar softened. Bolstered by a weaker dollar, gold prices jumped as much as 1% on Wednesday, as investors kept hopes pinned on a U.S. stimulus package even after President Donald Trump threatened to not sign the relief bill.

Bullion, considered a hedge against inflation and currency debasement, rose more than 23% this year, benefiting from massive stimulus unleashed globally.

Silver rose 1.7% to $25.56 an ounce. Platinum gained 0.8% to $1,009.69 and palladium was up by 0.6% at$2,327.61.

Consecutively, analysts see the rally in metals, miners, and other commodities lasting well beyond 2026~27 and really turning into a life-changing appreciation/depreciation phase for traders.

Mining stocks of junior gold miners as well as silver mining companies trade based on supply and demand. That said, very short-term movements in the price of silver and gold are often driven by investor sentiment and increased economic uncertainty. And while these miners can control their operating costs, to some degree, they simply can't do anything about the price of the commodities they produce. As recently, silver and gold, have been in rally mode in trading, junior miners have also seen their mining stock prices rise.

The problem with today's stock price gain is that gold and silver are historically volatile commodities, prone to swift and often dramatic swings. However, it's worth noting that precious metals have been rallying in 2020, pushing the shares of many mining companies dramatically higher. Silver miners Endeavour and Helca Mining,  for example, have done even better, each up more than 80%. That's not meant to suggest that these stocks can't rise further, but rather that a lot of positives are currently priced into the precious metals mining space at this point. Investors looking at these mining stocks today will find them listed among the best silver stocks to buy on many analysts’ sites.

The volatile precious metal space has thus far proven to be quite rewarding with gold and silver registering record gains since the start of the COVID-19 pandemic.  As a result, many investors have started viewing junior gold miners and mining stocks in general as diversifying assets that fit into a broader allocation plan. For most long-term investors the risks easily outweigh the reward of trying to time individual market sectors, particularly after they've already had a big run-up.

Many mining stocks of mid-tier and junior mining companies are assessed on the basis of the performance and balance sheets of the respective organization, which determine their profile among retail and institutional investors.