The Mining Industry Risks vs Rewards, 6 Stocks Leading This Group Higher

Greetings,
Last week we talked about the price action we saw on silver and called a “strong buy” on SLV . I am writing to you here again today after a week that saw gold & silver advance 5% on better than average weekly volume, today we will take a closer look at the mining industry. The mining sector as a whole has started the new year with a 13% advance and many of the stocks we will talk about today are leaders in this industry group. We know that we can always get a better return on investment when we pick a stock rather than a ETF tied to the price of silver or gold, but with that greater chance of reward we also assume more risk. Long know as one of the more dangerous industries, the mining group has lots of headwind in the form of regulation & compliance, permits, environmental issues and the like as well as the inherent risks that come with mine safety.

Here is a link to the Mine Safety and Health Administration, MSHA website  where you can find data on mining industry accident reports. Even with the risks outlined above the mining industry is safer now than ever before and new technology has moved this old industry into the 21st century.

Lets take a look at some of the stocks leading this group, that as we mentioned are off to the races so far this year with a quick 4 week, 13% advance.

Yamana Gold Inc. – (AUY) – Chart  This stock sits just 3% off 52 week highs after a huge 13% move higher this week in strong volume. I believe this stock may still have more upside as well. Yamana Gold Inc. is a Canadian-based gold producer with significant gold production, gold development stage properties, exploration properties, and land positions in Brazil, Argentina, Chile, Mexico and Colombia. Earnings are due on February 27 and EPS growth is expected to be just 4% at 0.24 vs 0.23. it is safe to say the bar is set low here and we should keep this stock on our watch list.

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Compania de Minas Buenaventura ADS. – (BVN) – Chart  Although this stock is still 12% off its 52 week highs, it closed this past week with a healthy 13.5% gain, volume was just about average so we would like to see volume pick up a bit. Average daily volume (ADV) is just around 1 million shares. Buenaventura is Peru’s largest publicly-traded precious metals company and a major holder of mining rights in Peru. The Company is engaged in the mining, processing, development and exploration of gold, silver and other metals via wholly-owned mines, as well as through its participation in joint exploration projects. Earnings are due on March 6 with EPS growth expected to be just 1% after 3 qtrs. of double digit growth. 0.89 vs 0.88

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Barrick Gold Corp. – (ABX) – Chart  Up this week  8% on very strong weekly volume, this stock sits 12% from it 52 week high. Barrick is the gold industry leader, with a portfolio of 26 operating mines and advanced exploration and development projects located across five continents, and large land positions on some of the world’s most prolific and prospective mineral trends. Earnings are due on February 17, this company has scored 9 straight qtrs. of double digit EPS growth and this qtr. is expected to show 38% growth of $1.31 vs 0.95.

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Royal Gold Inc. – (RGLD) – Chart  This stock had a great week, up 11.5% on very strong weekly volume, it remains 10% off 52 week highs and had recently found support along its 200 day moving average (ma.) Royal Gold, Inc. owns and manages royalties and similar interests primarily on precious metals mines, with a focus on gold. The Company’s portfolio provides investors with a unique opportunity to capture value in the precious metals sector without incurring many of the costs and risks associated with mine operations. Earnings are due on February 2 with expected EPS growth of 45%, 0.48 vs 0.33. Royal has reported 8 stright qtrs. of double digit growth.

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For those of you that are like me and like looking at small cap names we have one that was on our under $10 page not long ago, it closed Friday at $12.46 after a nice weekly gain of 14.5% on better than average weekly volume. This stock sits just 7% off 52 week highs.

Richmont Mines Inc. – (RIC) – Chart  Richmont Mines is a Quebec-based gold company with over 20 years of experience in exploration, mine development and production. Richmont Mines was founded in 1981 by Jean-Guy Rivard. During the subsequent decade, the company attracted a range of public and private financing, which was used to acquire properties and carry out exploration programs. Richmont Mines has been a publicly traded company since 1984.

 As we look at the 3 month daily chart above, we can see how important the breakout above $12 is and will look to this area now as support going forward. Many times past resistance offers support once broken, the next test to the upside will the $13 level. That is all for now, and as always if you have any questions or comments please contact me.

Thank you for your visit, my best wishes, $$$, ET.

Equity Trader.me

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“Great changes may not happen right away, but with effort even the difficult may become easy.”Bill Blackman