The price per ounce of gold recently surged past US$3,500, and investors took notice. Now, it’s unclear when the price might come back to earth, or at the very least stabilize. Yet if you’re an investor interested in gold, there might be a better opportunity than just buying a brick.
During the next commodity boom, there’s a way to combine traditional safe-haven qualities like these with the cyclical growth potential. So let’s look at how, and one mining stock to consider.
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Commodities that work
First, let’s look at gold and silver together. These are metals that both thrive when inflation rises or currencies come down. In times of economic volatility, like right now, investors flock to gold as a store of value. We’ve seen this as the price of gold climbs higher. Silver, on the other hand, benefits from that same safe-haven demand. Yet if the next commodity boom is tied to inflationary pressure, high government spending, or currency volatility, gold and silver could see even more price momentum.
Yet it’s not just this growth opportunity that should interest investors. In fact, silver in particular has a unique dual role. It’s a precious metal, sure, but also an industrial one. Silver is a key part of solar panels, electric vehicles, and electronics. With the global economy investing further in clean energy and new technologies, silver demand is soaring, and prices climb with it. Gold doesn’t have that same industrial use, but its status remains a core asset.
Now you could invest in silver and gold, as mentioned. However, miners can be a great way to amplify the moves of the underlying metals. During a commodity boom, investors could benefit from both the rising prices and the expanding profit margins of producers. Add in dividends from some miners, and this is an income layer that turns into a growth story.
Consider SSR
If you’re looking for that shiny investment opportunity, not much shines brighter than SSR Mining (TSX: SSRM). This is a strong stock supported by a solid balance sheet and future growth. Recent numbers demonstrate this, with revenue growing 119% year over year, and earnings up 800%! This shows SSR isn’t just riding a higher metal price; it’s managing operations effectively.
Furthermore, profitability metrics back this up. The company reported an operating margin above 18% and a profit margin of 12.7%. This suggests efficiency and cost control, which can be critical in the volatile mining sector. Furthermore, the mining stock surged nearly 287% in the last year alone, showing that the market continues to reward this high-flier.
Sure, it’s unlikely we’re going to see another surge of around 300%. Yet the market clearly sees this isn’t just a stock riding gold prices. In fact, it looks well-positioned for more growth. The mining stock has $438 million in cash against $356 million in debt. Furthermore, its debt-to-equity ratio is extremely low at 8.7%. With the stock trading at nine times earnings, the stock looks undervalued even at these levels! It’s perfect for those seeking a long-term strategy.
Bottom line
SSR seems like a great option for investors wanting the rise of gold and silver prices, plus the surge of opportunity that comes with a mining stock. It may not provide dividends, but for growth-focused investors, it’s a compelling option — one that can add growth as well as a hedge against the uncertainty of global growth trends.
