Precious metals have taken a huge step back in recent days. First put to the sword by a strong dollar and the impact of rampant selling to meet margin calls. Now gold is suffering as investors have reacted positively to news of more central bank support to battle the financial impact of the coronavirus.
Bullion was last dealing at $1,570 per ounce. This is the lowest level since the middle of February, a time before fears over the Covid-19 crisis ramped up significantly.
Don’t count gold out, though. One suspects that confidence across financial markets will continue to violently ebb and flow as the pandemic develops. Meanwhile, a selection of geopolitical and macroenomic issues, whether it be Brexit, US Presidential elections or ongoing trade tensions, are lingering in the background too. Factors that could also help push yellow metal prices northwards again. For all of these reasons I have tipped Centamin as a top safe-haven share to buy in these volatile times.
In the same vein, I consider Sylvania Platinum (LSE: SLP) to be a similarly wise safe haven to buy today. Like gold, the platinum group metals (a list that includes platinum, palladium and rhodium) also have terrific appeal for investors in troubled times like these.
Let’s look at rhodium, for example. This metal — by far the world’s rarest and as a consequence most expensive — rocketed 141% in price in 2019 as investor nerves ratcheted up. The emergence of the coronavirus has given the commodity fresh fuel to move still higher. Recent levels of $13,100 per ounce mean that it has more than doubled in value since the start of the year too.
With the price outlook for Sylvania Platinum’s other metals looking quite robust, City analysts expect annual earnings to balloon more than 200% in the current fiscal year (to June 2020). Another 24% bottom-line advance is anticipated for financial 2021.
A superb all-rounder
Right now this AIM-quoted business trades on a rock-bottom forward price-to-earnings (P/E) ratio of 2.9 times. What’s more it carries an eye-popping 10% dividend yield at current prices. For a mix of value, growth and income, Sylvania is hard to beat. And its obvious safe-haven qualities make it a particularly-brilliant pick at this particular moment in time.
Some of you might be asking whether any mining company can be considered a truly defensive investment. The business of pulling raw materials out of the ground is fraught with complications, one where disappointing exploration results and unexpected production problems can wreak havoc with profits.
It’s a good point, but one which doesn’t take the shine off Sylvania. At least not in my book. That ultra-low forward earnings multiple more than bakes in the prospect of any operational risks, in my book. Indeed, it’s a reading that provides oodles of upside given the bright outlook for PGM prices in 2020 and beyond.
It’s ugly out there…
The threat posed by the coronavirus outbreak has spooked global markets, sending stock prices reeling.
And with the Covid-19 virus now beginning to spread beyond of China and Italy, it seems very likely that the bull market we’ve enjoyed over the past decade could finally be coming to an end.
Against such a backdrop of market worry, it’s little wonder that many investors are starting to panic. (After all, nobody likes to see the value of their portfolio fall significantly in such a short space of time.)
Fortunately, The Motley Fool is here to help, and you don’t have to face this alone…
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Royston Wild has no position in any of the shares mentioned. The Motley Fool UK has no position in any of the shares mentioned. Views expressed on the companies mentioned in this article are those of the writer and therefore may differ from the official recommendations we make in our subscription services such as Share Advisor, Hidden Winners and Pro. Here at The Motley Fool we believe that considering a diverse range of insights makes us better investors.