In extremely uncertain and volatile economic times like now, gold and silver is one place which has traditionally been the best place to wait out the storm, at least in recent history.
Gold, and especially silver, prices have underperformed as a safe haven asset class in March, with the spot prices of most precious metals declining in line with the broader stock market.
I do believe that a lot of this selling has been driven by both panic selling of Gold Exchange Traded Funds like the GLD that tracks the price of gold directly, as well as margin calls and other types of forced selling in which investors needed to liquidate their portfolio (gold tends to be one of the first assets to be sold, since it’s highly liquid and traded globally).
For investors looking to take the risk of investing in a precious metals producer, Pan American Silver (TSX:PAAS) is a great company to consider, for a few reasons. Prior to the coronavirus-led meltdown in financial markets, the share price of Pan American had doubled on a year-over-year basis due mostly to a massive discovery of silver deposits in Mexico.
This discovery provided for speculation that Pan American could double production in short order, improving the economics of the project, particularly if the price of silver did what it was supposed to do and go up (which it obviously didn’t). The company is one of the few paying a dividend as well.
If you believe the gold-silver spread is too high, and want to make a long-term bet on a high-quality silver producer with world-class assets, check out Pan American.
Invest wisely, my friends.