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Here we go, Fools! Careening into relative weakness following an historic surge, gold, silver, and their related equities are taking the sort of nosedive that seasoned precious metal investors have learned to expect (and even welcome!).

The way sentiment flips on a dime in these intensely volatile markets, you'd think the Federal Reserve had suddenly found a way to print bullion in place of fiat dollars. As with previous pauses in the upward trend, however, I maintain that the fundamental pillars supporting continued long-term strength in precious metals have not eroded in the least.

The way I see it, the stark reality of state and municipal budget shortfalls in the United States has yet to spawn the realization that a completely new sort of bailout may well be on the horizon. Meanwhile, underfunded pension liabilities hover like an anvil over the dominoes of nascent American recovery hopes. Confidence regarding Europe's sovereign debt problem appears to be enjoying an upswing, but the underlying ailment has no more been cured than the toxic derivative exposures and "legacy assets" that fester throughout the global financial system.

For those who agree that gold and silver remain very far removed from anything resembling a peak, this modest pause that evolved into a more meaningful correction Thursday is signaling opportunity just as the weakest hands in the game are busy liquidating. I trust that veteran gold and silver investors raised a bit of cash during the surge for just such an occasion, and I encourage some redeployment of booked gains into these bouts of relative weakness.

Snapshot of a golden opportunity
Although I can not forecast whether this correction will continue to carve a deeper trench into that mountain of recent gains, I urge prospective newcomers to consider the nature of the opportunity presented here. Shares of Goldcorp (NYSE: GG  ) are exchanging hands for about the same price they fetched one year ago. It's as if the market deems a subsequent 20% increase in the gold price, long-awaited commercial production from the world-class Penasquito mine, and a string of brilliant strategic transactions added zero shareholder value to the equation. If that is the market's conclusion, then color me contrarian.

If Yamana Gold (NYSE: AUY  ) was already one of the supreme value plays in the gold sector when I featured the stock within my Top 10 Gold and Silver Stocks for 2011, I would argue that its moat grew wider still following a swift 9% haircut. Rich in copper as well as gold, Yamana is an especially attractive choice for those who share my bullish longer-term outlook for the red metal. Also worthy of consideration in that category are the aptly named Freeport-McMoRan Copper & Gold (NYSE: FCX  ) , and Newmont Mining (NYSE: NEM  ) (for its 9.1 billion-pound copper hoard).

The silver slingshot snap-back
Exhibiting the familiar characteristics of silver's tethered price relationship to gold (which I have affectionately termed the slingshot effect), the recent snap-back in prices for silver and its related equities has indeed produced broader moves on a percentage basis than those seen in gold. Here again, and even to a greater degree, the opportunity for investors who remain bullish on silver's long-term outlook to capitalize on this pullback need not be overlooked.

A momentary buzz seemed to surround Coeur d'Alene Mines (NYSE: CDE  ) shares after a Deutsche Bank analyst placed a thought-provoking $54 price target on the stock. Now trading about 57% beneath a 12-month price target that I consider entirely reasonable, you can bet I perceive uncommon opportunity in shares of Coeur d'Alene Mines.

Silver Standard Resources (Nasdaq: SSRI  ) has only recently made the all-important transition from development into production, but already the miner is poised to yield 10.3 million ounces of silver equivalent in 2011. The successful inauguration of Pirquitas, combined with an "unrivaled pipeline" of silver development projects, has one analyst touting the miner's potential "to evolve into the fastest growing intermediate silver producer". Now priced some 23% below a 52-week high struck just weeks ago, I consider Silver Standard another compelling opportunity.

Further down the totem pole of silver production scale, Endeavour Silver (AMEX: EXK  ) continues to stand out as an immutable engine of growth. Even after a significant retreat from recent highs, the stock remains some 82% above where it stood when I heralded a major growth spurt in the making back in August of 2010. Eager to continue an impressive six-year streak of expanding annual production volumes, Endeavour is targeting 3.7 million ounces of silver production in 2011 ... for a respectable 12.6% increase. I view near-term weakness in Endeavour's shares as an invitation to partake in one of the industry's foremost growth opportunities.

Fool contributor Christopher Barker can be found blogging actively and acting Foolishly within the CAPS community under the username TMFSinchiruna. He tweets. He owns shares of Coeur d'Alene Mines, Endeavour Silver, Freeport-McMoRan Copper & Gold, Goldcorp, and Silver Standard Resources. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a gilded disclosure policy.

Read/Post Comments (4) | Recommend This Article (40)

Comments from our Foolish Readers

Help us keep this a respectfully Foolish area! This is a place for our readers to discuss, debate, and learn more about the Foolish investing topic you read about above. Help us keep it clean and safe. If you believe a comment is abusive or otherwise violates our Fool's Rules, please report it via the Report this Comment Report this Comment icon found on every comment.

  • Report this Comment On January 21, 2011, at 4:09 PM, cmmtgnmn wrote:

    Think i'll stick to tck for now and buy actual silver instead of silver companies.

  • Report this Comment On January 21, 2011, at 5:18 PM, Speed03 wrote:

    I am buy TCK now....Copper and Coal

  • Report this Comment On January 21, 2011, at 6:01 PM, rfaramir wrote:


    Yes to physical silver! I know I did. Perhaps a bit early, but at the time it seemed like the drop that very day was drawing me into the gold and silver exchange.

  • Report this Comment On January 24, 2011, at 3:57 PM, waw9339 wrote:

    Yes to gold and silver. However, I like GBG and MFN as both have great growth potential.

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