Shares of gold and silver miner Hecla Mining (HL -0.42%) rose 10% out of the gate on Wednesday. That gain didn't hold up, but the stock was still higher by roughly 8% at 11 a.m. EDT today. There was no particular news out of the company, but an analyst update out of Bank of America probably helped to get investors into a buying mood.
Like most precious metals miners, Hecla Mining produces more than just gold. Although the company's list of products includes lead and zinc, the big one today is silver. In the first quarter, gold made up about 60% of the company's business with silver at roughly 25% (lead and zinc split the rest). Silver used to be a bigger piece of the whole, but over the last few years, gold has outperformed, and Hecla (along with many others) shifted more toward that metal. However, the company is still one of the largest silver miners in the United States.
That's a good thing today, with silver rallying sharply higher in recent months. In fact, silver has trounced gold of late, with the metal up some 50% so far this year versus gold's advance of about 35%, using iShares Silver Trust and SPDR Gold Shares as proxies (both of these exchange-traded funds own the physical metals in their names).
Bank of America's expectation that gold and silver will rally further, with silver continuing to be the bigger gainer, was the main reason for its upgrade of Hecla from underperform to neutral. While hardly a resounding recommendation, that still counts as an upgrade, based on the miner's still-sizable exposure to silver. Investors reacted positively. After the run-up today, however, the shares are trading above Bank of America's $6.25 price target.
Precious metals have been on a huge run since hitting a low earlier in the year. Although it is nice to see a stock move ever higher, trees don't grow to the sky, as the old Wall Street saying goes. Investors looking at Hecla, which has nearly doubled in value so far this year, should probably take a cautious approach just in case investors change their mood again.
For reference, that's not uncommon when it comes to gold and silver, which have a long history of dramatic price swings -- in both directions.