Low interest rates continue to incentivize investments in U.S.-listed equities and in safe-haven assets such as precious metals. High inflation may also trigger some panic in the financial markets, which could lead to higher volatility, further increasing the demand for safe haven assets.
As a result, the price of gold is expected to perform well over the next few months, remaining significantly above the mark of $1,800 an ounce. Each ounce of gold was trading at $1,815.28 as of the writing of this article.
Buying shares of publicly traded gold mining companies is my favorite way to take advantage of gold bull markets, as these stocks typically trade higher when the yellow metal goes through a favorable period. Coeur Mining Inc (CDE, Financial), which was trading at $6.99 per share at close on Wednesday, represents a compelling gold investment opportunity, in my opinion.
The Chicago, Illinois-based gold producer has assets in Alaska, South Dakota, Nevada and Mexico. It also has a silver-zinc-lead mineral deposit in British Columbia. From its reserves, Coeur Mining projects that it could reach a record output of gold equivalent this year, hitting 538,000 ounces of metal produced at a total cost to applicable sales (CAS) of approximately $735 per ounce of metal. These figures include a production of silver expected to exceed 11 million ounces at a CAS of approximately $12.25 an ounce.
The company has recently spent money for the expansion of drilling in British Columbia and southern Nevada, and for infill drillings in Alaska. Even so, the cash flow will likely still be enough to increase the overall strength of the company's financial situation. As a result, the stock price could finally bounce back, recovering from the 35.44% drop that has occurred so far this year. The stock has a market cap of $1.80 billion and an enterprise value of $2.10 billion.
Coeur Mining Inc doesn’t seem expensive, as the share price trades below the 50-Day Moving Average of $7.08 and the 200-Day Moving Average of $8.84. Also, the share price is above the lower limit of the 52-Week Range of $6.09 to $12.60. The price-book ratio of 2.07 is below the industry median of 2.39, while the enterprise value-to-Ebitda ratio of 7.32 is below the industry median of 9.59.
Wall Street has set an outperform rating for this stock with an average target price of $10.16.
Disclosure: I have no positions in any securities mentioned.
