Gold Beats the Market: Here’s a Unique Way to Play It

Did you know gold has quietly outperformed both the Nasdaq and S&P 500, both year-to-date and over the last 365 days? 

It’s a fact that’s flown under the radar for many investors … but the numbers don’t lie:

Historically, when gold starts to outshine these major indices, it often leads to a surge of interest in related investments … like gold mining stocks. 

But as we’ve pointed out before, gold miners are often plagued by high capital expenditures, rising labor and energy costs, and big geographic risks. For many investors, this makes them unappealing despite their leverage to gold prices.

One alternative we’ve touched on before is to consider gold royalty companies, which typically offer lower-risk exposure to gold price movements. 

If you're looking for a more unique play, A-Mark Precious Metals (NASDAQ: AMRK) might be worth your attention. 

A-Mark isn't a miner or a royalty company; it's a leading precious metals broker. 

If you’ve ever bought gold online, there's a good chance you’ve done so through one of A-Mark's subsidiaries, like JM Bullion or Silver Gold Bull. 

This company benefits from the increased demand for physical metals, especially during times of economic uncertainty, without the downsides of mining operations.

As gold continues to outperform, A-Mark's business model positions it to thrive, making it an intriguing option for those looking to capitalize on the current trend. 

For example, in Fiscal 2023, A-Mark sold about 2.6 million ounces of gold and 156 million ounces of silver, generating nearly $9.3 billion in revenue. What sets A-Mark apart is that they are fully hedged against metal price moves, earning their profit from the spread between the purchase and sale prices of metals. 

Their business model means that A-Mark benefits from increased transaction volumes and wider spreads during volatile times—without the risks associated with owning and operating mines.

Michael Baker, a top 4% Wall Street analyst for DA Davidson, is also bullish. He wrote that the stock is trading at a "relatively undemanding” multiple of 7x its projected 2025 EPS.

"As a leader in the precious metals space, the company is going to market with a unique vertically integrated model," Baker backgrounded, "which includes a robust DTC platform and a wholesale segment, among other business lines."

Baker forecasts a price of $44.00, which, if achieved, would be a +23% move from here:

Click here to see AMRK forecasts. 

The stock is also screening well according to our valuation criteria:

• AMRK ($35.71) is trading below its intrinsic value of $55.28, according to an updated version of Benjamin Graham's Formula from Chapter 11 of "The Intelligent Investor"
• AMRK is good value based on its earnings relative to its share price (10.44x), compared to the US market average (25.81x)

With insider ownership high (company insiders own nearly 24% of the shares outstanding) and a business model built to thrive on market volatility, A-Mark looks poised to benefit as more investors flock to gold. And with gold outperforming major indices, now might be time to add it to your watchlist.

Click here to analyze AMRK.

Want to get in touch? Email us at news@wallstreetzen.com.