At the flip of a dime, suddenly the precious metals that were increasingly understood as safe haven assets mere days ago are being shunned by many as an unacceptable risk.
Even as hedge fund manager John Paulson revealed his expectation that gold will go to $4,000 per ounce, claims that fellow billionaire George Soros may have booked some profits in gold and silver seem more in keeping with the market sentiment du jour.
I personally feel as though risk is rampant throughout the financial realm, so while some elect to flee from gold or silver in a perceived retreat from downside risk, I would merely point out that opportunity cost is ultimately a form of risk as well. Stated another way, I consider an absence of gold and silver exposure a greater risk to investors than any near-term downside that may remain in store.
Back when I presented my Top 10 Gold and Silver Stocks for 2011, I explained my selection of Yamana Gold
Yamana reported net income of $148 million for the first quarter of 2011, in addition to a very healthy operating margin of 50%, thanks to what is persistently one of the finest cost structures anywhere in the industry. Operating cost inputs are naturally on the rise given the trailing trajectory for oil prices, but strong copper prices positioned Yamana's net cash cost at a remarkable $14 per gold-equivalent ounce during the quarter. By comparison, Barrick Gold
Although no one can predict the future with absolute certainty, I am personally confident in my assertion that $1,500 is just the beginning for gold. If that is the case, and Yamana's first-quarter cash margin of $1,373 per gold-equivalent ounce is poised to expand substantially as the miner executes a 60% production growth spurt over the next few years, then I invite Fools to consider the magnitude of the stock's upside potential. I consider the risk of missing out on an epic profit surge by this and other quality gold miners far more palpable than the risks of lasting metal-price declines under the prevailing, high-risk macroeconomic environment.
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 Agnico-Eagle Mines, Goldcorp, and Yamana Gold. 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.