Though the gold bug investment crowd would lynch anyone who agrees, but it appears that the top may be in place on the charts of various precious metals - at least for the intermediate term.
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The price of gold has stalled out several times over the past three months around the $1425 level. Many investors are wondering if this could be a signal of a short-term top in other precious metals and if this will lead to an upcoming decline in the related companies. Though the move down may be interspersed with sharp retracement rallies, there are a number of issues it might be best to avoid, if the downdraft continues. (For additional information on precious metal investment opportunities, refer to Options On Gold And Silver ETFs.)
Below, we highlight those precious metals stocks with high betas. A beta of greater than one means the stock in question will swing with wider amplitude than the broad market, while a beta of less than one will mean swings of narrower amplitude.
The Wildest of the Volatile PMs
The following high-beta precious metals shares should theoretically fall faster than the rest, if the gold market keeps retreating and if the general market begins to plummet - they are risky!
Topping our high beta precious metals list is Hecla Mining (NYSE:HL), a silver mining company whose base of operations is in the U.S. Hecla has a beta of 2.31 and is up 56% over the past twelve months.
Stillwater Mining Company (NYSE:SWC) is based in Montana, and specializes in platinum and palladium extraction. Stillwater shares climbed more than 65% over the past twelve months and carries a hefty 2.15 beta. With a market cap of approximately $2 billion, investment into this stock can be either a great great success or a tremendous ruin.
Ever More Silver Volatility
Storied silver miner Coeur d'Alene Mines Corporation (NYSE:CDE) is a third, high-beta outfit one may want to avoid, if the top in precious metals is in. Coeur stock climbed by approximately 41% over the past twelve months. CDE carries a beta of 1.75. The company operates mines globally, with interests in projects in the United States, Chile, Argentina, Bolivia, Mexico and Tanzania.
NovaGold Resources. (AMEX:NG) engages in the exploration and development of mineral properties in Alaska and British Columbia. The shares trade with a beta of 1.25. If precious metals (particularly gold) will drop, NG shares can be expected to decline by more than the average market movement. Investors have seen the price of the shares appreciate by approximately 100% over the past twelve months.
Volatility Seekers: Take Note
For those who are interested in volatility, the Market Vectors Junior Gold ETF (NYSE:GDXJ) is available from Van Eck Global. The beta is undoubtedly high, considering the principal holdings are high volatility miners, including some of those listed above. It is also important to note that precious metal companies tend to have higher betas due to the volatile nature or commodity prices.
The Bottom Line
Should the precious metals complex start to fall, the above-named, high-beta issues are more likely to take a bigger hit than those that are less volatile. (For more information on investing in gold, check out Does It Still Pay To Invest In Gold.)
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