Gold and silver continue to be in a bullish position as the sell-off in precious metals continues. As such, analysts see gold prices some sort of upturn approaching fast, likely near $2000 an ounce. This comes after lease rates for gold fluctuated between -1% and 2% annualized the last decade, until pandemic shutdowns hit in March.
Meanwhile, silver’s rate position is even more bullish. Its 2-month lease rates are well above 1-year levels, a tight to even under-supplied market is indicated for the physical bank bullion market.
As a result, metals and mining stocks continue to be the preferred method of portfolio diversification for investors looking to weather the current uncertainty in the economic climate. Several Canadian junior miners and exploration companies are better positioned amid the lockdown that has caused some disruptions to the industry.
One of the top picks for junior gold miners is B2Gold (BTG) - a Vancouver-based mining company that operates properties in Africa and the Philippines. Its mining stock is among the top picks in 2020 after it rose 40% last year. The fundamentals are extremely strong, with profit margins of nearly 40% that help to maximize its cash flows. B2Gold has generated $365 million in cash and has a small long-term debt at only $49 million.
Currently, B2Gold is the highest-yielding gold mining stock in the sector, yielding nearly 3%. There are indications that this trend is likely to increase. It expects to produce 1 million ounces of gold in 2020, and should do even better in 2021.
In terms of silver we’re continuing to see strong demand in various industries – a factor, which resulted in the world hitting peak silver production. Meanwhile, the global economy is shifting into higher gear coming out of the Covid pandemic and the manufacturing sector is picking up. This will drive demand further and put silver miners in an advantaged position.
For this reason, many see the current moment as opportune for buffing up your silver holdings. One of the best silver stocks to buy is that of Pan American Silver Corp. (PAAS). The Canada-based company operates in the U.S. and Latin America. It has nine producing mines and a diversified portfolio of silver, gold, zinc, lead and copper. Its total reserve base of silver is 550 million ounces of silver and that of gold - 5.2 million ounces.
Despite two of Pan American’s mines in Peru suspending operations for most of the third quarter due to the pandemic, the company was able to post net earnings growth of 73%. As analysts and investors await full-year results on Feb. 19, projections are for 89 cents a share for 2020, which is up 45% over last year. In 2021, earnings of the miner are forecast to rise 191%. Pan American pays a dividend of 7 cents a share and that dividend is projected to rise 15% per year for the next three years.
These two mining stocks are demonstrating solid growth and a potential massive increase in output, which could be a dividend raiser. Buy these on any dip, and they should be much higher a year from now.