A Snapshot Of Gold, Silver And The Miners
Supporting Image for Blog Post

 
View from the Observation Deck  
  1. Today's blog post illustrates the wide disparities that often exist between the annual price performance of an ounce of gold bullion, silver and the equity returns posted by the mining companies.  
  2. Since precious metals tend to be priced in U.S. dollars, investors should also be aware of the relative strength of the U.S. dollar against other major global currencies, in our opinion. 
  3. Precious metals have historically been considered potential inflation hedges by investors, and it looks like it is working early on in 2022 (see table). From 1926-2021, the CPI rate averaged 3.0%, according to data from the Bureau of Labor Statistics. It stood at 8.3% in April 2022.  
  4. While once thought of as "digital gold," cryptocurrencies have been trading more like a "speculative tech investment" in 2022, according to The New York Times. Cryptocurrencies have been volatile and have not delivered on the goal of providing a store of value the way gold has in this climate of robust inflation. 
  5. As of 5/27/22, the price of gold closed trading at $1,853.72 per ounce, according to Bloomberg. The all-time closing high for the spot price is $2,060.59 per ounce, set on 8/6/20.
  6. From 2007 through 2021, the Philadelphia Stock Exchange Gold & Silver Index only posted a positive total return in seven of the 15 calendar years, but four of them occurred from 2016 through 2020. It is positive YTD. 
  7. As of 5/31/22, Bloomberg's earnings per share figures (in dollars) for 2019, 2020 and 2021 (actual earnings) and consensus estimated earnings per share for 2022 and 2023 for the Philadelphia Stock Exchange Gold & Silver Index were as follows: $1.00 (2019); $4.62 (2020); $5.63 (2021); $7.58 (2022 Est.); and $8.20 (2023 Est.).   
  8. In addition to being considered as an inflation hedge, precious metals can also be a potential safe haven for investors during periods of elevated geopolitical risk, in our opinion. We encourage investors to keep an eye on the war between Russia and Ukraine. 
The information presented is not intended to constitute an investment recommendation for, or advice to, any specific person. By providing this information, First Trust is not undertaking to give advice in any fiduciary capacity within the meaning of ERISA, the Internal Revenue Code or any other regulatory framework. Financial professionals are responsible for evaluating investment risks independently and for exercising independent judgment in determining whether investments are appropriate for their clients.  

Download a PDF of this post, please click here. 
Posted on Tuesday, May 31, 2022 @ 11:03 AM

These posts were prepared by First Trust Advisors L.P., and reflect the current opinion of the authors. They are based upon sources and data believed to be accurate and reliable. Opinions and forward looking statements expressed are subject to change without notice. This information does not constitute a solicitation or an offer to buy or sell any security.