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The Death of Gold and Silver Stocks

NEW YORK ( TheStreet) -- Back in late 1981 or early 1982 one of the most popular magazines of that era had a cover story that read something like "The Death of the Stock Market." I remember it well, and I also recall that the stock market seemed "dead" for years.

Well, as Mark Twain penned, "The rumors of my death have been greatly exaggerated." Hopefully the notion that gold and silver Stocks have kicked the bucket are also "greatly exaggerated." In fact, on my own "bucket list" is to live to see these stocks rise like the mythical Phoenix and soar spectacularly.

On Friday some of the most prominent of the gold and silver stocks hit new 52-week lows. By market cap (over $29 billion) Barrick Gold (ABX - Get Report) had an intraday low of $29.33 on huge volume.

That's a new 52-week low, and the price is getting closer to the five-year lows that were experienced back during the financial fiasco of 2008 that gave us "the Great Recession." Here's a chart of ABX covering that time period -- look at the trailing 12-month diluted EPS line. Something smells fishy to me and I'm not writing after eating a lox and bagel sandwich.

ABX Chart ABX data by YCharts

Now let's look at one of the bellwethers in the silver-producing world and one of my favorite ways to invest in the upside of silver, and that's the royalty-streaming company Silver Wheaton (SLW - Get Report), which finished on Friday at $31.75. Here's the five-year chart with the same metrics as we applied to ABX.

SLW Chart SLW data by YCharts

This doesn't look like a chart that foretells the "death" of silver as a viable investment. Oddly, its price is higher right now then it was back in mid-2012, but it's well off its $40-plus price attained by the end of 2012. SLW is rated a "buy" here at TheStreet.

On Thursday TheStreet's research dept. made the following observations on SLW: "The company's strengths can be seen in multiple areas, such as its largely solid financial position with reasonable debt levels by most measures, expanding profit margins, increase in stock price during the past year and notable return on equity. We feel these strengths outweigh the fact that the company shows weak operating cash flow."
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GGGG $0.00 0.00%
ABX $17.46 -5.01%
AU $14.89 -3.75%
SLW $18.80 -3.49%
GLD $122.21 -0.61%


Chart of I:DJI
DOW 17,651.26 -99.65 -0.56%
S&P 500 2,051.12 -12.25 -0.59%
NASDAQ 4,725.6390 -37.5850 -0.79%

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