NEW YORK (TheStreet) -- With precious metals stocks making a big run off December lows, early indications so far this year of investors rolling out of the S&P 500 and into precious metals mining stocks has many alert traders seeking stocks that offer the best bang for the buck during the anticipated "risk off" cycle.
With the S&P trading at 1.1% below its Dec. 31 close and the Market Vectors Gold Miners ETF (GDX) making gains of 12.3% within the first 15 days of trading, traders sense a decimating 2013 for the mining sector will follow with a strong, maybe equally powerful, rebound in 2014. For sure, traders will try to game the peaks and troughs during the anticipated bull run in the precious metals mining sector in 2014.
But with First Majestic Silver (AG) in your portfolio, don't bother. This is a stock to ride for the potential fat, lower-taxing capital gain down the road.
In short, I can see First Majestic soaring to between $17.50 and $26 on the back of a projected average silver price of $25 in 2014. That's a nearly 130% move to the potential peak in the stock, catalyzed by an approximate 25% move back higher (average increase for 2014, from the close of 2013) in the price of silver. AG closed Friday at $10.80 and is up 10.2% for the year to date.
Producers, Not Potentials
Bull markets in the mining sector begin with industry insiders, working their way up the food chain to the fund managers and institutional investors. Money managers want income stream, something to evaluate and project. In short, they want longer-term stakes in producers, not short-term, in-and-out trades back and forth between potential producers and low-cap explorers.