Two thousand years ago, Wise Men bore gifts of gold, frankincense and myrrh to celebrate the birth of Baby Jesus.
Today, wise investors are bearing gold, silver and cryptocurrency stocks in the dawn of the world’s latest financial crisis.
Like the downfall of the Roman Empire, the collapses of SVB Financial and Signature Bank (and the Credit Suisse takeover) have had many consequences. Consumer and investor confidence is shaken. And despite federal regulators and Jamie Dimon playing the heroic role of Julius Caesar, fears of contagion remain.
One of the biggest impacts on the capital markets is lower interest rates. With the banking system on shaky footing, bond prices are up and yields down since the SVB saga began—bad news for regional banks but good news for bondholders.
Other industries are benefiting from the uncertainty around the financial sector. Precious metals and alternative currencies have become popular safe haven destinations for investors rattled by lower rates and a weakened U.S. dollar. In turn, stocks tied to these areas are trending higher.
Why Is Kinross Gold Stock Going Up?
Kinross Gold Corp. (NYSE: KGC) enjoyed a seven-day run through March 20th that coincided with a surge in gold prices. As investors grew increasingly concerned about the banking turmoil, gold shot up to nearly $2,000 per troy ounce last week. This week, investors' attention has shifted back to the Fed policy meeting, which, along with expectations of a softer 25 basis point rate hike, has stemmed the gold bug rally.
Yet, with the banking crisis likely far from over and regulatory changes still to come, the perceived safety of gold could keep prices elevated for some time. This is welcomed news for Kinross Gold, one of the world’s top 10 gold miners.
Prior to the recent gold surge, the company posted better-than-expected fourth-quarter results. Production was up 75% and production costs were down 5% year-over-year. And with management forecasting that 2023 production will rise, higher realized gold prices could keep the strong financial reports coming.
The mid-cap gold play is trading at 15x the consensus earnings estimate for 2023. This is expensive relative to mining peers — but Kinross has a crown jewel asset in the Tasiast mine located in Mauritania. The low-cost operation boasts world class gold deposits and is the company’s main growth driver.
Analysts seem to think this makes the premium worth paying for. A consensus buy rating and target above $5.00 suggest Kinross will keep shining.
What Is a Good Silver Stock?
Canadian silver miner Pan American Silver Corp. (NASDAQ: PAAS) is up almost 20% month-to-date. As with Olympic medals, silver plays second fiddle to gold, but silver has also been a big winner in the wake of the SVB collapse. Silver futures jumped more than 10% last week, their biggest weekly move since August 2020, as investors sought liquid assets that have proven to be a store of value over time.
With silver mines across North and South America, Pan American Silver owns a portfolio that produced 18.5 million ounces of silver in 2022. Exploration assets that represent over 500 million in proven and probable reserves make it one of the largest silver players on the planet. Additional exposure to gold, zinc, lead and copper makes the stock a diversified way to invest in metals.
Considered the most diverse of the precious metals, silver is used in a wide range of applications from automobiles and solar panels to jewelry and silverware. Financial crisis aside, silver bulls generally believe that over time, demand will outstrip supply, leading to a gradual increase in price. Pan American Silver bulls, of which there are several, see the stock digging its way back into the $20’s over the next 12 months.
Why Is Coinbase Global Stock Going Up?
When the Federal Reserve injected $297 billion of liquidity into the U.S. economy on March 17th, Coinbase Global, Inc. (NASDAQ: COIN) gapped up above $70. Viewed as a return to quantitative easing (QE), the move gave a boost to a cryptocurrency market which has historically been sensitive to Fed liquidity patterns. With Bitcoin and other crypto assets already trending higher as a safe haven alternative to the suddenly vulnerable dollar, Coinbase extended its winning streak to six days. Picking up where it left off, the crypto platform operator has gone from roughly $50 to $80 in just over a week.
With Bitcoin trading above $28,000 for the first time since Summer 2022, ‘BTC $30K’ may be inevitable. Coinbase trading activity on the asset has been dramatically skewed to the buy side recently, suggesting the run is far from over.
Of course, if the financial markets stabilize and investors revert to the greenback and Treasuries, the volatile crypto space (and Coinbase) could get a rude awakening.
Unlike the Magi, the market can be a regifter.