These 3 Bull Market Winners Continue to Gain Steam

Previously, we discussed the bullish state of affairs for commodities and gold prices, and why the trend is in its early innings.

In recent weeks, a couple of catalysts have emerged that could push gold prices close to $4,000 by the end of the year. These include:

• A major dovish shift in monetary policy
• The passage of the BBB
• A slowing economy

Today, we will cover these developments in detail, and why investors should continue buying on dips. Then, I’ll share 3 precious metals stocks with significant upside potential.

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In a volatile year for financial markets, gold has been a standout asset by outperforming with minimal volatility. YTD, gold prices are up 25%, while the VanEck Gold Miners ETF is up 49%. 

[If you want to participate in the strongest trends and best sectors, then you should check out the Zen Ratings Industry Rank screener. This screener identifies and ranks the top sectors in the market through a proven, quantitative system. All year, precious metals have been among the top-ranked industries. Click here to see which other sectors are highly ranked by the Zen Ratings.]

Positive Developments

In a previous commentary, we noted that the gold bull market had more room to run due to an absence of froth. 

Historically, bull markets in precious metals have ended with major outperformance from its high-beta components like silver and junior miners. Additionally, there tends to be an influx of speculative capital which shows up in elevated call buying, put selling, and ETF inflows. 

So, it’s noteworthy that while gold prices have been range-bound between $3,200 and $3,500 over the past 3 months, high-beta components have started outperforming. Compare this to early April when gold dropped by 6% and GDX by 12%, silver dropped by 13%, while junior miners were down by 16%. 

Currently, gold is off of its 52-week highs by 3.2%, while silver is off by 1.6%. Similarly, there is a positive divergence as junior miners have been making higher highs and higher lows, while large-cap miners have remained range-bound like gold.

Bigger Picture

Many traders and investors may miss the bigger picture due to excessively focusing on the short-term picture.

The US is facing a challenging fiscal situation. Deficits are only increasing, and there is no current political constituency for fiscal discipline. Therefore, it’s likely that monetary policy will be used to artificially lower interest rates by monetizing portions of the debt. Ultimately, this is bullish for gold prices as it will push interest rates lower while adding to inflationary pressures. 

President Trump’s interference with monetary policy and public advocacy for lower interest rates also contribute to weakness in the US dollar and a decrease in faith in the financial system. It also seems that any Fed Chair candidate who doesn’t immediately pledge to cut rates would be disqualified from consideration.

Overall, it’s an indication that the metaphorical wall between elected officials and monetary policy is being covertly corrupted. Diminished faith and less trust in the financial system is bullish for hard assets like gold and silver.

Here are 3 stocks that could outperform under these conditions…

1. Kinross Gold (KGC)

This repeat Stock of the Week pick is one of the top 10 gold miners in the world in terms of annual production. Last year, it produced 2.17 million ounces of gold-equivalent. Its major mines are located in Mauritania and Brazil. 

This year, the company is forecasting a modest 5% increase in production, but it seeks to increase annual production by 30% before the end of the decade due to a new project in Ontario. 

The combination of KGC’s savvy management, coupled with rising gold prices have resulted in a strong balance sheet and operational performance. It’s also reflected in the company’s Zen Ratings as KGC has an A for Financials. This component measures how much cash a company can generate from its assets in addition to assessing its long-term health.

Last quarter, the company exceeded analysts’ earnings estimates by 20%, resulting in a flurry of upgrades and hikes in earnings estimates. Over the last year, free cash flow has also doubled, and management is planning to return $650 million to shareholders via buybacks and dividends. Analysts getting more bullish on the stock is one reason why KGC has an A for Sentiment. In addition to analyst upgrades, Sentiment reflects a company’s insider activity, short interest, and earnings surprises.

KGC is a part of the Zen Investor portfolio, where it is up more than 32% since being added in October of last year. Each stock in the Zen Investor portfolio is hand-picked by 40+ year market veteran Steve Reitmeister, who uses a rigorous 4-step screening process to locate the highest-potential stocks. Click here to check out other stocks in the Zen Investor portfolio.

3. Wheaton Precious Metals (WPM)

Here we’ve got one of the largest precious metals streaming companies in the world. Streaming companies are very attractive to investors, as they provide exposure to gold and silver while minimizing the inherent risk that comes with miners by buying stakes in mines all over the world and receiving a portion of production at a discount.

This results in an asset-light business model that avoids operational risks, minimizes exposure to mining costs, and ensures high-margin cash flow. Streamers are also able to leverage their industry connections and knowledge to gain access to the most promising projects. Currently, WPM has stakes in 18 mines in operations and 28 that are in development. 

WPM has been thriving along with the bull market in precious metals. YTD, the stock is up nearly 65%. It also exceeded analysts’ earnings expectations for 9 straight quarters. For the full year, analysts anticipate $2.35 in EPS, an 87% increase from last year, due to a combination of higher prices and more production. 

Overall, the Zen Ratings rate WPM a Buy (B). B-rated stocks have an average annual return of 19.8%.

3. B2gold (BTG)

This multinational company is based in Vancouver, Canada and currently operates mines in Mali, the Philippines, and Namibia. The company also holds interests in exploration projects in Africa, Europe, and South America in addition to several junior miners. 

Last year, the company produced 804,778 ounces which was a 7% increase from the previous year at an all-in cost of $1,533 per ounce. This year, the company expects a substantial increase in production to between 970,000 and 1.1 million ounces which is between a 20% to 35% increase due to a new mine coming online in Canada this quarter.

The Zen Ratings are also bullish on BTG as it is rated a Strong Buy (A). A-rated stocks have produced an average annual return of 32.5% which beats the S&P 500’s average annual gain of 10.8%.

Given BTG’s strong growth prospects, it’s not surprising that it’s ranked in the top 2% for Growth out of more than 4,500 stocks. For the full year, analysts are expecting earnings growth of 224%. Analysts increased their bullishness on the stock following BTG’s strong Q1 report and confirmation that production in Canada would begin in Q2 of this year. As a result, they hiked 2026 and 2027 earnings estimates by 118% and 52%, respectively. 

Conclusion

On the surface, it seems like a normal, healthy pause for gold following months of strong gains.

But under the surface, there are signs that animal spirits are finally waking up which is consistent with previous precious metals bull markets.

On top of this, the fundamentals continue to improve for gold, while several catalysts are in play including likely Fed cuts sometime in the latter half of the year, a new, dovish Fed chair, and widening deficits due to tax cuts and spending increases under the BBB.

What to Do Next?

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