Gold Miners Are Now Growth Stocks

One of the selling points of precious metals miners is that they're "leveraged to the gold/silver price", which means a small move in the price of the underlying metal produces a big change in a miner's profitability. This is bad when the metals are going down but potentially great when they're going up. And right now the math is highly favorable: Gold and silver are up from a year ago, so miners that produce similar amounts of metal at a similar per-ounce cost are generating big earnings increases.

If gold and silver just hold their current levels, the cash flow being generated by the strongest miners will allow them to 1) pay off debt and strengthen their balance sheets and 2) institute or increase dividends. It's possible that a year from now the precious metals miners will appeal to both growth and income oriented investors. That's a lot of potential cash flowing into what is still a tiny sector.

Source: Safe Haven

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