Gold, Silver, or Copper? Own 1 Mining Stock for an Inflation Hedge

With inflation surging at a rapid pace in 2022, people are taking precious metal investing seriously. The materials sector, where mining stocks belong, is the second-best performer after energy thus far this year. Besides gold, other precious metals like silver and copper are excellent hedges against inflation.

Since these metals are impossible to own physically, your alternative option is to take positions in mining stocks. Generally, when metal prices rise, stock prices of mining companies follow. The top metals producers on the TSX are also excellent portfolio diversifiers.

Gold

Gold is the world’s precious metal and the acknowledged king of all metals. Karora Resources (TSX: KRR) was an obscure stock before, but not anymore. Investors’ interest in this gold stock is rising, because it’s one of the top performers in the sector. At $6.69 per share, the trailing one-year price return and year-to-date gain are 73.7% and 57.4%, respectively.

Had you invested $10,000 on year-end 2021, your money would be worth $15,741.18 today. Market analysts covering Karora forecast a return potential between 9.4% and 27% in 12 months. The $1.02 billion multi-operational mineral resource company from West Perth, Australia has an organic growth plan in place.

For the full year 2022, Karora expects total gold production to be 110,000 to 135,000 ounces. However, the primary target is to produce between 185,000 and 205,000 ounces of gold by 2024. The integrated Beta Hunt Gold Mine and Higginsville Gold Operations in Western Australia are its producing mines.

In 2021, the annual gold production of 112,814 ounces was a record for the company. While net earnings declined significantly versus 2020 due to numerous headwinds, cash flow from operations increased 13% to $106.5 million. Besides the double production target in gold, Karora expects its nickel production to increase.

Silver

First Majestic Silver (TSX:FR)(NYSE: AG) focuses on silver and gold production. The mining stock trades at $13.08 per share and pays a 0.22% dividend. Its total return in 3.01 years is 73.13% (20.04% CAGR). The $3.48 billion miner is a bit unique, because you can buy its silver products (bars, ingots, coins, and medallions) at the lowest possible premiums online through the Bullion Store.

While silver production in Q1 2022 declined 10% versus Q1 2021, gold production increased 147%. The complete financial results, however, will be available on May 12, 2022. Because producing operations increased to four, expect First Majestic’s consolidated total production this year to be higher compared to 2021.

Copper

Capstone Copper (TSX: CS), formerly Capstone Mining, is familiar to growth investors. This mining stock ranked fifth in TMX Group’s TSX30 List in 2021. Its total return in 3.01 years is 900% (115.14% CAGR). Market analysts recommend a buy rating for TSX30 winner. Their 12-month average price target is $9.07, or 51.6% higher than its current share price of $5.98.

The company changed the name following the business combination of Capstone Mining and Mantos Copper (Bermuda) Limited. According to the management of this $1 billion red metal producer, the transformational growth story begins. Its CEO John Mackenzie said, “This company has the makings of becoming a Canadian-based copper champion.” Besides the strong balance sheet, the assets have long lives.

Safe havens

Mining stocks, whether gold, silver, or copper, can help you accumulate wealth over time. Today, many investors turn to safe havens to hedge against inflation.