What happened
Running rampant through the markets, the bulls are bidding the S&P 500 and the Dow Jones Industrial Average higher on the first day of trading in October. Shares of precious metals stocks, however, are looking especially lustrous in investors' eyes thanks to companies receiving favorable coverage from Wall Street and silver and gold prices rising higher.
As of 11:15 a.m. ET, shares of New Gold (NGD 4.08%) are up 13.4%, while Endeavour Silver (EXK 3.25%) and Coeur Mining (CDE 4.18%) have risen 11.6% and 15.1%, respectively.
NYSEMKT: NGD
Key Data Points
So what
Believing that New Gold's stock has room to run, Michael Siperco, an analyst at RBC Capital, raised his price target on the company's stock to $1.25 from $1. Based on the stock's closing price of $0.88 on Friday, Siperco's upwardly revised price target implies upside of 42%.
According to TheFly.com, Siperco predicated the new price target on his confidence -- after visiting the asset -- that mineral production will increase at the company's Rainy River mine in the third quarter, as well as gold equivalent ounce (GEO) production rising by 2024 and all-in sustaining costs (AISC) falling.
In a recent investor presentation, New Gold projected GEO production would grow from 243,000 ounces in 2021 to an annual average of 310,000 ounces for 2022 to 2027. Regarding expenses, New Gold expects AISC to fall from $1,415 per GEO in 2021 to an average of $1,135 per GEO for 2022 to 2027.
Besides Siperco's optimistic outlook, New Gold is also seeing its shares move higher due to the uptick in silver and gold prices today. As of 11:49 a.m. ET, the price of silver and gold are up 7.9% and 1.7%, respectively.
Silver Price data by YCharts.
NYSE: EXK
Key Data Points
Unlike New Gold, Endeavour Silver hasn't received attention from Wall Street. Instead, the stock's climb can solely be attributed to the rise in silver and gold prices. Endeavour Silver has two assets in operation: Guanacevi, a silver mine, and Bolanitos, a silver-gold mine. In 2022, Endeavour Silver expects its two assets to achieve consolidated silver production of 4.9 to 5.1 million ounces and gold production of 34,000 to 36,000 ounces.
Similarly, Coeur Mining has exposure to both precious metals. In 2021, for example, gold production accounted for about 70% of Coeur Mining's revenue, while silver production accounted for approximately 30%.
NYSE: CDE
Key Data Points
Now what
Precious metals investors have had a rough go in 2022, with silver and gold prices falling considerably, so the upward movements in New Gold's stock, as well as those of Endeavour Silver and Coeur Mining, is hardly surprising, considering today's spike in silver and gold prices.
And it's possible that investors see the prices of silver and gold continuing to rise higher in the days to come. Between inflation, supply chain disruptions, and the fear of a recession, investors often seek safety in precious metal investments. While that dynamic hasn't played out recently, investors may be seeing today's activity as a harbinger of additional rises in the prices of silver and gold.
That being said, investors who are interested in New Gold, Endeavour Silver, or Coeur Mining would be well suited to dig deeper into these stocks before picking up shares.
