Over the first half of the year, precious metals such as gold and silver, as well as the shares of companies that dig them out of the earth, were clearly the star performers. At one point, an exchange-traded fund tracking a basket of metals and mining stocks (ticker: XME) was up nearly 90% since January, soundly trouncing the return of virtually every major index, market sector or industry group.
It’s important to recognize that there are no clear answers to questions about whether, how much or how to invest in the metals market. But if the unthinkable were to happen, there’s little doubt that gold and silver prices would soar. The possibility of geopolitical tumult is a major reason to invest in precious metals.
At Macrotrends, there’s an interesting array of charts showing the relationship of metals prices to each other and to various other factors. For a comprehensive listing of domestic mining stocks, visit finviz.com and click on the Screener tab along the top. Next, click on Basic Materials as a sector option and Gold or Silver as industry options. You’ll notice that few mining companies have earned a profit over the last 12 months, and those that have usually are selling at stratospheric valuations. Buyer beware?
Finally, check out a letter from one James Wilson Marshall, who participated in the great California gold rush of 1849. Marshall’s account won’t help you decide whether to buy metals stocks, but you’ll surely come away knowing that owning gold now is a whole lot easier than it was.