It comes as no surprise that investor demand for Fresnillo (LSE: FRES) has marched skywards alongside precious metal prices in recent months.
The gold and silver star has seen its stock value ascend 33% since the start of 2016. And I believe the foundations could be laid for much, much more strength looking ahead, particularly as an already-tense political backdrop is becoming ever-more turbulent.
The UK’s decision to hit the Brexit button, and Donald Trump’s ascension to the Oval Office in 2016, were undoubtedly the earth-shaking political events so far this century. And the geopolitical waters are becoming ever-muddier, particularly as tensions between the 45th president and long-term foes Russia, North Korea, Iran and Syria threaten to spiral out of control.
Looking elsewhere, the political landscape in France is becoming ever-more jittery as far-left presidential candidate Jean-Luc Mélenchon continues to pick up steam, making an already tough-to-call election still tougher to predict.
And British Prime Minister Theresa May’s decision to call a June general election earlier this week throws plenty of more uncertainty into the mix. While recent polling suggests a bruising Tory majority is around the corner, recent failures by pollsters around the globe suggest that nothing should be taken for granted. Anything other than a Conservative win would throw a spanner in the works of an EU exit.
When you also throw in signs that inflation is back on the rise, allied with persistent tension over economic turbulence in emerging regions, it comes as little wonder that precious metals are back in vogue.
Production powering up
This backcloth is helping support gold prices close to the critical $1,300 per ounce marker, around $1,285. And a burst through this level in the days ahead could see the safe-haven metal really light up, and pull the share price of Fresnillo with it.
But the near-term direction of gold values is not the only reason to be excited about the Mexican digger.
Fresnillo delivered record silver production of 50.3m ounces in 2016, up 7.1% year-on-year, while gold output soared by almost a quarter to 935,513 ounces. And planned project expansions like that at Fresnillo’s San Julián asset should keep output levels rising long into the future.
I reckon the silver surfer is in terrific shape to deliver splendid returns in the near term and beyond.
Sailing higher
Car insurance colossus Admiral Group (LSE: ADM), like its sector peers, has been one of the strongest performing stocks in 2016 as driver premiums continue to tick higher. The stock has added 11% in value since New Year’s Eve, and should continue to rise in line with insurance costs.
While claims inflation is ticking merrily higher, data across the industry suggests that this continues to be offset by rampant price rises. Indeed, Barclays Capital notes that while inflation stands at around 5%, price increases stand at double this figure at 10%.
Investors should also be cheered by Admiral’s ability to keep its customer base ticking higher, with 720,000 new clients taking the number on its books to a fresh record of 7.2m. And with the car insurer also making increasing progress abroad (revenues outside of the UK surged 57% last year), I reckon Admiral’s share price should keep on rising.
