PLG, ANO, PAL: Precious Metals Beyond Gold

This week’s buoyancy in the US stock markets has seen investors coming back to equities. Although cautious, investors do not want to miss the rally which may turn out to be a gravy train. Market players are also not appearing entirely convinced about the longevity of the rally especially the way markets started tumbling yesterday morning after weak consumer confidence report. However, precious metal stocks Platinum Group Metals Limited (AMEX: PLG), Anooraq Resources Corporation (AMEX: ANO) and North American Palladium Ltd (AMEX: PAL) are surging as investors see platinum outperforming gold in the long term.

Market crashes reveal previously non-existent profit opportunities and it is no different with the recent slide. Good businesses are going for a song and generally speaking, stocks are dirt cheap. However, it does not mean all stocks are good buys at current valuations. For example, I wouldn't like to touch oil drilling stocks except for quick trading gains even though they are bouncing back now.

However, Platinum has got a different story. Just like gold, this precious metal is also in short supply and thus, attracting investors looking for long term gains. Platinum Group Metals Limited (AMEX: PLG) trades at $1.3 and has moved in the range of $1.25 - $2.8 in the last 52 weeks. It has a market capitalization of $230.86 million apart from a leading position in the platinum exploration market. Platinum Group has majority of operations in South Africa and Canada and is a direct beneficiary of the increasing demand of platinum.

Canada based mining firm Anooraq Resources Corporation (AMEX: ANO) has lost nearly 14 per cent on a monthly basis but has recovered 6 per cent in the last 5 days. The stock has a high beta so sharp gains can be expected in the event of market going up from here.

Besides palladium, North American Palladium Ltd (AMEX: PAL) has sizeable exposure in the gold and platinum exploration and mining. The company benefitted from high mineral prices in the latest quarter and the stock price has moved up nearly 20 per cent since the earnings announcement early this month.  

Platinum prices have gone up by 6 per cent since July to $1825 per ounce and reports suggest it may be on its way to go beyond $1900 per ounce by the end of the current year. All these stocks are going to benefit from price increases which appear highly likely as investors pocket gains and channel their funds from gold to platinum.