Gold and silver are having a moment.
Before Christmas, gold was trading at $1,980 an ounce. That was already pretty telling, but the price has since increased 18 percent to more than $2,300 an ounce.
Silver – sometimes described as gold for its speed – has gone even further, rising 23 percent over the past four months to $28 an ounce.
And there is talk of greater profits. Both metals tend to do well when investors are worried about the future, when inflation is considered a risk, and when interest rates are low.
Recent enthusiasm has been fueled by the first two, with central banks adding more flavor. Many have been enthusiastic and consistent buyers of gold – and they are supposed to know what they are doing. Looking ahead, interest rates are expected to fall, although more slowly than markets anticipated. When drawdowns start to occur, that could give gold a new boost.
Bright prospects: rising gold price boosted Hochschild
Silver and gold miner Hochschild has been basking in the glory of precious metals. The shares were £1 when Midas recommended them in December. Today they cost £1.49, an extraordinary increase in just a few months. Hochschild is not the only one benefiting from the recent rally in gold and silver, but the South America-based miner has adopted several self-help measures that should provide additional ballast this year and beyond.
Hochschild has been operating in Latin America for the past 100 years, but went through a period of turmoil when government officials threatened to close its flagship mine in Peru.
That threat was finally averted last year, a new political regime is in place and the mine is back in operation. Hochschild also started production in Brazil, on time and on budget, with a mine acquired just a couple of years ago.
Further expansion is expected in both countries with two mines closer to existing sites. The group also owns a mine in Argentina that produces high-grade gold and silver.
CEO Eduardo Landin is optimistic about Hochschild’s prospects and brokers tend to believe him. Appointed last summer, Landin has spent decades in the mining industry, with a deep understanding of potential pitfalls and how to avoid them.
Production is expected to rise from 301,000 ounces to around 350,000 ounces this year, rising to more than 450,000 ounces starting in 2027. That should contribute to strong sales and profit growth, particularly if gold prices and silver remain high.
Midas Verdict: Shareholders have reaped benefits from Hochschild and there could be more to come. The shares were trading at around £3 before the Peruvian debacle, when gold was much less fashionable and production was lower. But a 49 percent rise in four months is unusual, and gold and silver have moved far and fast. Cautious investors should sell half their shares at £1.49, take bank profits and hold the rest.
Traded in: Main market Heart: H.O.C. Contact: hochschildmining.com