3 Ways to Benefit from Deals in Precious Metals

A recent article on the front page of The Wall Street Journal was about a possible merge between Barrick Gold ABX and Newmont Mining Corp. NEM,two of the biggest gold mining companies in the world. The sector is certainly ripe for consolidation as asset values are very low along with the cost of capital. For investors, here are three ways to profit from deals in gold and silver entities.

As the possible deal between deal Barrick Gold and Newmont Mining evinces, there are gains to be made with the biggest and the best.

Even though Barrick Gold and Newmont Mining are blue chips, the prices are tempting. Barrick Gold is around $17.60 a share with the Wall Street analyst price target being $20.56 over the next year. Newmont Mining has jumped more than 8 percent for the last week of market action, but it is off over 17 percent for the last year.

The exchange traded funds are excellent financial vehicles for profiting from deals in gold and silver.

SPDR Gold Shares GLD, the exchange traded fund for gold, is up nearly 7 percent for 2014. iShares Silver Trust SLV, the exchange traded fund for silver, does not have the following of SPDR Gold Shares. As a result, it is off for the last week, month, quarter, six months, and year of market action. Due to the nature of the sector, gold will draw the bulk of the investor attention due to its traditional role as a safe harbor asset.

That greatly favors SPDR Gold Shares over iShares Silver Trust as an investment tool.

Small caps in natural resources with promising holdings are always attractive takeover targets, as detailed in a previous article in Benzinga. That is especially so for those with valuable assets such as Premium Exploration PMMEF, a gold company operating in Idaho. Due to tension abroad, investors are willing to pay more for North American gold and silver firms such as Premium Exploration.