Silver stocks and funds to buy after a short-term pullback offer strong potential for additional gains, several investment gurus advised.
Such silver stocks and funds have soared so far this year and that precious metal historically is led upward by a superior rise in gold before the white metal catches up and usually surpasses the much more expensive yellow metal’s return on a percentage basis. Silver prices have been the biggest gainer so far this year, followed by the technology-heavy NASDAQ Composite Index and gold.
Year-to-date returns through Aug. 31 show silver skyrocketing 59.28%, the NASDAQ Composite climbing 31.24%, gold gaining 29.78%, the S&P 500 rising 8.58% and the Dow Jones Industrial Average dipping 0.40%. The ascent of silver and gold, fueled significantly by $6-trillion-plus in federal stimulus and Federal Reserve actions, followed a recent pullback in their prices that gives investors who had been on the sidelines a second chance at purchasing precious metals, as well as related stocks and funds, at slightly reduced prices.
The NASDAQ Composite Index closed at a record 11,775.50 on Aug. 31, notching its strongest August gain since 2000. Despite declining on Aug. 31, the S&P 500 clinched its best August return since 1986, while the Dow Jones Industrial Average attained its highest rise for that month since 1984 and silver soared 18% to surmount its short-term retreat mid-month with a strong start and finish.
Identifying Silver Stocks and Funds to Buy after a Short-Term Pullback
After a dramatic rise in gold and silver earlier in 2020, profit-taking occurred among some short-term investors, said Rich Checkan, president and chief operating officer of Asset Strategies International, a full-service tangible asset dealer in Rockville, Maryland.
“I believe this most recent bout is over,” Checkan told me.
Rich Checkan, president, Asset Strategies International
Meanwhile, the value of the U.S. Dollar Index has fallen 4.72% so far in 2020, as of Aug. 31. The index closed on Aug. 31 at its lowest level since May 1, 2018, incurring its worst August in five years and its fourth straight month of decline.
The U.S. Dollar Falls in Value, Affecting Silver Stocks and Funds to Buy
Currencies around the world have fallen against the price of gold since mid-March, with the U.S. dollar having dropped in value further than all but a handful of others, said Patrick Heller, communications officer at Michigan’s largest rare coin and precious metals dealer, Liberty Coin Service, of Lansing.
Retail patrons at Liberty Coin Service’s store, just three miles from Michigan’s Capitol building, increasingly are buying silver and gold bullion and coins, Heller said. Stepped-up media coverage about the drop in the U.S. dollar likely has been a big reason, he added.
Many of those customers are first-time buyers, Heller continued. Liberty Coin Service’s sales in July more than tripled June’s total, he added.
Coin Dealer Offers Firsthand Account of Silver’s Surge
News about gold reaching all-time high prices, before adjusting for inflation, also is playing a role in spiking demand from retail customers, Heller said.
“In July, our quantity of purchases from the public were still only 82% of the average per month from January 2016 through December 2019,” Heller said. “However, the average transaction size was so large that it was our second-largest total dollars spent buying from retail customers of any month since January 2016. Only August 2017 was higher in dollars spent, though on a much greater number of transactions.”
SIL Is Among the Silver Stocks and Funds to Buy after a Short-Term Pullback
Investors have their choice of silver mining stocks and funds to buy, in addition to bullion and coins. Those who seek dividend income may be interested in Global X Silver Miners Fund (NYSE:SIL) as a proxy for silver.
SIL offers a trailing 12-month dividend yield of 1.14%, gained 4.05% on Friday, Aug. 29, and 1.18% on Monday, Aug. 31, to lift its year-to-date return to 50.22%. The fund’s returns reached 7.37% for the past week, 2.71% for the last month, 37.80% for the past three months and 63.45% for the last 12 months.
Chart courtesy of www.stockcharts.com
Kramer Eyes Dividend-Paying Silver Investments Priced to Purchase
“For silver itself, I prefer Wheaton Precious Metals Corp. (NYSE:WPM), which is less about mining than pure silver trading,” said Hilary Kramer, national radio host of the “Millionaire Maker” program who also heads the GameChangers and Value Authority advisory services. “They know what they’re doing and pay a dividend. Rising silver prices will enhance the shareholder payout.”
Columnist and author Paul Dykewicz obtains input from money manager Hilary Kramer, whose premium advisory services include 2-Day Trader, Turbo Trader, High Octane Trader and Inner Circle.
Wheaton Precious Metals offers a current dividend yield of 0.75% and has a forward price-to-earnings ratio of 50.35. Its returns reached 80.40% year-to-date (YTD), 4.52% for the last week, -1.58% for the past month, 24.35% for the last three months and 82.79% for the past 12 months. WPM also gained 3.17% on Aug. 28, and 0.62% on Aug. 31.
Chart courtesy of www.stockcharts.com
Dividend-paying Silver Stocks and Funds to Buy after Short-term Pullback
“Probably the best stock in the space as far as relative share price performance is Pan American Silver (NASDAQ:PAAS),” said Jim Woods, who heads the Successful Investing, Intelligence Report and Bullseye Stock Trader advisory services. “That stock is outpacing 97% of all other publicly traded companies in terms of relative price strength.”
Pan American Silver offers a current dividend yield of 0.55% and has a consensus forward P/E ratio of 43.29. Its returns are 53.27% for the YTD, 9.31% for the last week, 3.08% for the past month, 23.58% for the last three months and 96.99% for the past 12 months. The stock most recently climbed 4.90% on Aug. 28 and 1.23% on Aug. 31.
Chart courtesy of www.stockcharts.com
Woods told me he uses relative price strength as a key screening tool and differentiator from rival stock pickers when he chooses recommendations for his Bullseye Stock Trader premium advisory service.
Paul Dykewicz meets with Jim Woods before COVID-19 to discuss new investment opportunities.
Skousen Eyes Silver Stocks and Funds to Buy after Short-term Pullback
Another investment forecaster who favors silver and gold is Mark Skousen, PhD, Presidential Fellow at Chapman University, recipient of the inaugural Triple Crown in Economics in 2018 and honoree as one of the 20 most influential living economists. Skousen, who writes a monthly investment newsletter called Forecasts & Strategies, recommended the purchase of Pan American Silver in his TNT Trader advisory service.
The stock recently rose 21% in two weeks, while the call options he recommended soared 101% during the same time span. To safeguard his gains, Skousen sets stop prices on stock recommendations in his trading services and boosts them as the share prices climb to ensure even larger profits are protected during the ascent.
Mark Skousen, a descendant of Benjamin Franklin, meets with Paul Dykewicz.
Beware of Risks with Silver Stocks and Funds to Buy after Short-Term Pullback
Investors can earn income and benefit from climbing precious metals prices by owning shares in mining companies, said Bob Carlson, chairman of the Board of Trustees of Virginia’s Fairfax County Employees’ Retirement System with more than $4 billion in assets. However, investors need to be aware that the share prices of mining companies are “far more volatile” than those of gold and silver themselves, he added.
Carlson, who also heads the Retirement Watch advisory service, said to remember that mining company shares are affected by factors other than the price of precious metals. Such considerations include a company’s debt level, management skill, labor relations and COVID-19 risks.
Pension fund Chairman Bob Carlson answers questions from Paul Dykewicz in an interview before social distancing became the norm after the outbreak of COVID-19.
Perry Provides Pick Among Silver Stocks and Funds to Buy after Short-Term Pullback
Bryan Perry, a former trader on Wall Street, is recommending Sprott Physical Gold and Silver Trust (NYSE:CEF) as a hedge position in his high-income Cash Machine investment newsletter.
Paul Dykewicz interviews Bryan Perry at a MoneyShow conference.
“The price of silver has rallied back to pre-coronavirus levels under the influence of two driving forces,” Perry said. “The first is the tidal wave of liquidity pouring into the global financial system brought on by central bank stimulus. At its core, fiscal stimulus eats away the purchasing power of fiat currencies, making precious metals an attractive hedge and investment.
“Stability in copper prices recently has speculators interpreting that broad commodity price inflation might be brewing, which also would bode well for putting upside pressure on silver that is used in several manufacturing subsectors. Silver is considered the poor man’s precious metal but has a history of catching fire and making sudden sharp moves higher to catch up with gold. Owning CEF offers the best of both metals in one ETF and in physical form.”
CEF jumped 1.80% on Aug. 28 and 0.79% on Aug. 31, while rising 4.48% in the last week, 4.32% in the past month, 24.89% in the last three months, 39.97% YTD and 37.26% in the last 12 months. It currently trades at a discount to its net asset value (NAV) of 1.96%, after the recent rise in its share price, while its three-year average discount to its NAV is a loftier 2.91%. Unfortunately for income investors, CEF does not pay a dividend.
Chart courtesy of www.stockcharts.com
Assets under management at CEF rose to $17 billion on Aug. 4, up 22% since June 30, company officials announced. Its net income rose 18.0% to $10.5 million, or 43 cents per share, at the end of second-quarter 2020, compared to $8.9 million for the same quarter last year.
COVID-19 Affects Silver Stocks and Funds to Buy after Short-Term Pullback
The fallout from the global COVID-19 pandemic has been immense in seemingly countless ways, but particularly in its human toll. As of Sept. 1, 25,484,767 cases and 850,544 deaths have occurred globally, along with 6,030,587 cases and 183,596 deaths in the United States. America has faced the grim reality of having the most cases and deaths by far of any country, including China, where COVID-19 originated.
As the U.S. economy reopens on a state-by-state basis, as well as in the District of Columbia, the stock market has recovered powerfully since March with both the NASDAQ Composite and S&P 500 setting record highs. With more than $6 trillion in federal stimulus boosting the likelihood inflation will rise in the future, experts predict further appreciation for silver and gold, regardless of the recent short-term pullback in each.
Paul Dykewicz, www.pauldykewicz.com, is an accomplished, award-winning journalist who has written for Dow Jones, the Wall Street Journal, Investor’s Business Daily, USA Today, the Journal of Commerce, Seeking Alpha, GuruFocus and other publications and websites. Paul, who can be followed on Twitter @PaulDykewicz, is the editor of StockInvestor.com and DividendInvestor.com, a writer for both websites and a columnist. He further is editorial director of Eagle Financial Publications in Washington, D.C., where he edits monthly investment newsletters, time-sensitive trading alerts, free e-letters and other investment reports. Paul previously served as business editor of Baltimore’s Daily Record newspaper. Paul also is the author of an inspirational book, “Holy Smokes! Golden Guidance from Notre Dame’s Championship Chaplain,” with a foreword by former national championship-winning football coach Lou Holtz. The book is endorsed by Joe Montana, Joe Theismann, Ara Parseghian, “Rocket” Ismail, Reggie Brooks, Dick Vitale and many others..
