There are three reasons to make bets –err, “invest”– in the precious metals complex, which includes the physical itself plus the producers. The chief reason –IMHO– is to create an offset to the silliness prevailing in most of the broad market. A second reason is that the fundamentals –at the macro and at the company level– are fairly easy to understand and to verify.
The third reason is that the gains can be very decent. E.g., in the past two years a typical ETF that tracks the spot price of gold such as IAU is up 4x times what a representative broad market index like RSP offered. So this question needs to be asked, “Have all the big gains been already made, and is it too late to jump into the game?”
It is also no secret that silver has broken out lately and that the metal exchanges are scrambling to cover demands for delivery. So here’s another chart, this time of a producer that offered gains that were 8x that offered by the broad market.
‘Investing’ can be done purely on the basis of “fundamentals”. ‘Trading’ can be done purely on the basis of “technicals”. The killer combo –of course–is to combine the two, in an approach that John Murphy calls ‘Rational Analysis’ or that Ben Graham would call ‘Common Sense’ . So let’s take a peek at PAAS’s fundamentals.
That’s a decent company, right? and, bought when it was much cheaper than present, it made a decent investment for me, as did many of its peers.
Standard Disclaimers: Nothing in this post should be construed as investing or trading advice, and I own positions in the charted tickers.