Tradier Rundown

Gold and Silver Mining Stocks in 2023

Gold and silver devotees believe that precious metals are long-term stores of value, and metals have a long history as means of exchange.

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Gold and silver devotees believe that precious metals are long-term stores of value, and metals have a long history as means of exchange.

The Bible’s Old Testament mentions gold 417 times and silver 320 times. Around 3200 BCE, the first Egyptian Pharoah, Menes, declared that one part gold equals two and one-half parts silver, this was the first recorded mention of the relationship between gold and silver as means of exchange.

In 2022, markets across all asset classes experienced significant declines. The S&P 500 dropped 19.44%, the long bond futures fell 21.66%, and the U.S. dollar index rose 8.03%. Rising interest rates, a strong dollar, and falling share prices tend to weigh on gold and silver prices. However, 2022 was anything but an ordinary year. Gold and silver outperformed stocks, bonds, real estate, cryptocurrencies, and most asset classes in 2022, cementing their historical role as the ultimate hard currencies.

In early 2023, gold and silver moved higher than the closing levels on December 30, 2022. Gold and silver mining shares tend to provide leverage to the underlying metal prices, underperforming when prices fall and outperforming the precious metals on the upside.


Gold and silver held their value in a challenging year- Gold is the leader- silver is more speculative

  • Stocks, bonds, real estate, and cryptocurrencies declined in 2022, and the dollar index increased.
  • Gold moved only 0.13% lower in 2022, and silver posted a 2.95% annual gain.
  • An ounce of silver is more than 78 times less expensive than an ounce of gold. Silver prices tend to move more on a percentage basis than gold prices, causing more speculative activity in the silver market.


The reasons for continued gains in 2023

  • Central banks purchased the most gold in 55 years in 2022.
  • In 1999, gold reached a bottom of $252.50 per ounce. Since then, every significant correction has been a buying opportunity, with gold reaching its latest nominal record peak in 2022 at over $2,070 per ounce.
  • The silver-gold ratio is a barometer for price action and investment demand. A rising ratio of the price of gold divided by the silver price tends to be a bearish signal, while a declining ratio is often bullish. Since September 2022, the ratio has made lower highs and lower lows.
  • Gold and silver mining shares have been rallying over the past weeks, and they are an indicator of investor sentiment, which drives the metal prices higher or lower.
  • Gold and silver proved they continue to be stores of value in 2022.


Gold and silver mining shares turbocharge the metals on the upside- The ETF products that provide diversification

  • Gold and silver mining stocks are leveraged to the metal’s prices.
  • Miners invest significant capital in extracting gold and silver from the earth’s crust.
  • GDX and SIL are the senior diversified gold and silver mining ETFs, holding portfolios of shares in the world’s leading publicly traded producers.
  • On Friday, January 13, gold at $1,921.70 was 5.23% higher in 2023. Silver at $24.372 was 1.38% higher in 2023.
  • On Friday, January 13, GDX at $32.65 was 13.92% higher in 2023, and SIL at $31.24 was 10.90% higher in 2023.
  • The price action in senior gold and silver mining ETFs supports higher precious metal prices.


Gold and silver exploration stocks and products with even more leverage

  • Gold and silver exploration companies provide more leverage than senior mining companies.
  • GDXJ and SILJ are junior diversified gold and silver exploration and mining ETFs, holding portfolios of shares in the world’s leading publicly traded exploration companies.
  • On Friday, January 13, GDXJ at $40.40 was 13.32% higher in 2023, and SILJ at $11.71 was 11.0% higher in 2023.
  • The exploration companies have outperformed gold and silver prices, with the leveraged junior gold mining ETF outperforming the seniors. Junior silver mining companies have kept pace with the senior silver miners.
  • The price action in junior gold and silver mining ETFs supports higher gold and silver prices.


History provides investment and trading advice

  • Past performance is never a guarantee of future price action.
  • More data often leads to more robust and accurate forecasts.
  • Gold and silver have been around for thousands of years.
  • The price action, macroeconomics, the geopolitical landscape, and long-term trends support gold and silver prices in 2023.  
  • Rising gold and silver prices tend to cause gold and silver mining and exploration stocks to outperform on a percentage basis.
  • Trends are your friend until they bend.


Thanks for reading, and stay tuned for the next edition of the Tradier Rundown!



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