SSR Mining (NASDAQ: SSRM) inventory declined 3.4% by means of 12:45 p.m. ET Wednesday after gold costs took one other leg decrease on inflation fears. This morning, the U.S. Bureau of Labor Statistics reported the Client Value Index (CPI) rose 2.4% for a second straight month in February.
These two issues are related.
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There is a conflict within the Mideast, and it might final some time. Traders view treasured metals like gold and silver as secure havens in occasions of battle, and SSR mines each (together with lead, zinc, and copper). Silver costs soared 2.5% within the aftermath of the assaults on Iran, and gold costs leapt 2.6%.
Battle may also be inflationary, although, particularly when it restricts oil provides and drives up gas costs. So whereas CPI held regular in February (nonetheless above the Fed’s 2% inflation goal), the fear is that the March knowledge will present a pointy rise in inflation.
If this occurs, buyers could promote treasured metals (which do not pay curiosity) and purchase bonds as a substitute (which do pay curiosity, and pay extra curiosity as inflation rises). This fear has gold sinking 1.1% (to $5,183 an oz.) at present, and silver down 5.3% at $84.85.
Out of all of the world’s gold shares, although, SSR Mining could also be one of many safer decisions.
Why? Recall that one week in the past, SSR agreed to money out its stake in its Turkish gold mine for $1.5 billion. This limits the inventory’s publicity to falling gold costs (in the event that they do fall) — whereas guaranteeing a $1.5 billion windfall at present.
When you think about that SSR prices lower than 17x trailing earnings and barely 8x ahead earnings, SSR appears to be like to me like a superb, low-cost technique to put money into gold in unsure occasions.
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