The Explosive Potential of Overlooked Mining Stocks

What We Found Might Shock You!?

While it may seem obvious, we suspect many have missed out on what we’ve discovered. Every groundbreaking detail is compiled in our exclusive InsightWire report. Read on to find out more about this!

Mining Stocks: The Next Big Thing – Here’s Why

As a prelude to the monumental insights we’re about to reveal in our upcoming report, let’s briefly explore the major trends in the mining sector.

The mining industry is diverse and is closely associated with the related underlying commodities categorized into two main groups: precious metals (including gold and silver) and industry metals (including copper, aluminum, and steel).

It turns out that during the last few years, precious metals have outperformed industry metals, as investors have been looking to hedge against increasing inflation caused by loose monetary policies.

Since mid-2021, gold and silver prices have been able to keep up and even outperform DAX, Germany’s main stock index tracking 40 blue chip companies. Elsewhere, aluminum and copper have declined during the same period.

Therefore, mining companies specializing in precious metals should garner more interest due to their higher return potential, driven by investor appetite for assets that hedge against inflation.

Therefore, mining companies specializing in precious metals should garner more interest due to their higher return potential, driven by investor appetite for assets that hedge against inflation.

Gold Reaches New ATH in July 2024, Highlighting the Potential of Mining Companies

The relevance of mining companies focused on noble metals is reflected by the performance of gold. The yellow metal has doubled in price since the end of 2018, reaching a fresh record high of $2,483 in July 2024.

While a correction in the price of gold is reasonable, the metal’s capability to act as a refuge against inflation and fiat devaluation on larger timeframes becomes more evident.

In the long term, gold not only helps investors protect from the declining purchasing power of fiat currencies but can secure generous inflation-adjusted returns. For example, since 2000, the US Consumer Price Index (CPI), the flagship index for US inflation, has increased by nearly 90%, while gold has surged over 750%. Why is there even a debate over gold’s inflation hedge capability?

Besides expanding inflation as a result of central banks’ free money to support economies suffering from the impact of the COVID-19 lockdowns, the metal is a good refuge against global uncertainty and regional conflicts.

Moreover, investors keep an eye on gold as the US dollar is slowly but steadily losing its status of a world reserve currency. The share of USD in international forex reserves around the world has declined from 65% in 2017 to historical lows of less than 59% in 2023. In the 2,000s, the dollar’s share was above 72%.  

Meanwhile, many central banks, especially in BRICS countries (which include Russia, India, China, and Brazil), continue to hoard gold to be prepared for a potential USD hyperinflation scenario.

Russia and China have more than doubled their gold reserves since 2018, while Brazil has quadrupled its gold holdings.

With the US dollar weakening against European currencies like the Euro (EUR) and British Pound (GBP), investing in European mining companies can be more rewarding than gaining exposure to US counterparts.

While gold is the king now, other metals have been doing great as well, including nickel, copper, lithium, zinc, and aluminum, among others. 

Why Should You Buy Mining Stocks Instead of Gold & Other Precious Metals?

Investing in gold miners may be more profitable than simply holding gold and gold-related funds. The recent rise in metal prices has stimulated mining firms to increase production and boost sales. With the cost of extracting remaining at relatively the same level, the operational leverage gives these companies an edge. Moreover, with fixed costs distributed to a larger output, the average production cost per unit can be reduced, having a positive impact on profit margins.

During the last few years, companies in the mining and the broader commodity sector have experienced robust cash flows, with precious metal miners being the biggest winners.

The increase in profit margins has helped many mining firms significantly reduce their debt levels and reinvest profits.

A Success Story You Must Know About

A compelling example is more valuable than any explanation or argument, so I’d like to share the story of a successful mining company that has navigated through all the stages of development. 

Aurubis AG, a Hamburg-based company listed on the Xetra exchange with the ticker NDA, is a mining company that focuses on a diverse selection of metals. It has grown into one of the world’s largest copper recyclers, but it also offers fine gold as bars and granules. With a market cap of 2.8 billion euro, NDA is an inspiration for early-stage mining firms, demonstrating how perseverance can lead to success.

The company has had many challenges over the last two decades, but it has emerged stronger each time.

This Company Triumphs Over Underlying Metals Like Gold & Copper

NDA has gained over 540% over the last 20 years, outperforming underlying commodities, including gold and copper.

During the third quarter of 2024, NDA surpassed analyst expectations by 8.2%, securing €4.71 billion, up 13% compared to 3Q 2023.

The company registered a net income of €156.9 million versus the €57.7m loss during the same period of 2023.

NDA’s earnings per share (EPS) took analysts by surprise, exceeding their estimates by 109%! Specifically, the company saw EPS of €3.57 compared to a €1.31 loss in 3Q 2023.

The recent success of Aurubis prompted analysts to revise their 3-year outlook, forecasting the company to grow at an average annual rate of 5.3% compared to the 1.8% growth outlook for Europe’s broader metals and mining sector.

What Should You Expect from Our Gem?

I’m excited to share some thoughts about the gem that we’ve discovered, although no spoilers for now – make sure to delve into our upcoming report!

The company we researched is in the early stages. As a junior mining firm, it’s priced very low—a real steal—with significant potential upside thanks to the robust mining industry.

The real treasure of our early-stage company is its reserves that it possesses, an aspect that we’ll explore in great detail.

Be the First to Find Out About It!

Many investors express regret for not paying attention to the companies when they were first reviewed by the StockWire.

These companies have certainly had a successful run, but there are other companies that are worth considering as well. Our team believes that some companies are currently undervalued and represent a good opportunity.

No one talks about mining stocks, ignoring their potential. Be the first to discover how miners outshine the broader market!

You can get a free copy of our Research report called InsightWire for a limited time by filling out your e-mail address below.