A second stock market crash is coming. Yes, it’s not the first time we’ve heard this. We’ve also heard that metals, especially gold, historically always prevail as a safe and secure investment. Again, not ground-breaking news for us individual investors.
FTSE mining shares have boasted strong performance this year, and this month especially. But which mining company is best and how do they differ? Here, I look at two FTSE mining shares I’d buy and hold. Both are strong prospects to beat a stock market crash, but I think each offers something different to its investors.
Stock market crash beneficiary?
Fresnillo (LSE:FRES) is a leading precious metals mining group based in Mexico and listed on the FTSE 100. It is the world’s leading primary silver producer and Mexico’s largest gold producer. These two precious metals have performed well, and the Fresnillo share price has risen by over 80% year-to-date. While the price of gold has increased, the price of silver has increased at a higher rate, hitting its highest price since 2016 and reducing the gold-silver price ratio.
Like many, Fresnillo has experienced some drops in production due to Covid-19 related disruption, maintaining its guidance on silver and reducing its guidance on gold. However, a restart of global industry activity should continue to support the price growth of silver. Fresnillo also produces lead and zinc, which are pivotal for lead-acid batteries for automobiles. I view Fresnillo as a sound investment to beat a stock market crash.
Glencore (LSE:GLEN) is one of the world’s largest globally diversified natural resource companies. Being a FTSE 100 commodity trading and mining company, I think this makes it a diverse, and some might argue defensive, option. The share price had fallen before recovering by over 50% since the last stock market crash. Production levels of coal, copper, and cobalt have all dropped as it has felt a harsher impact from Covid-19 restrictions than Fresnillo. This is largely due to national and regional lockdowns, which have forced Glencore to suspend some industrial assets. There has also been a history of legal investigations, most recently into mining operations in the Democratic Republic of Congo.
On a more positive note, Glencore is the world’s largest industrial supplier of cobalt and has signed a long-term partnership with Tesla which will use Glencore’s cobalt to make lithium-ion batteries. This is an exciting prospect given the hype of electric cars and current market value of Tesla. I think the size of Glencore and its future business means it can persevere through any potential fallout or volatility.
Foolish final word
Gold has the strongest reputation and I think it is a great hedge against a stock market crash. This was proven during the global financial crisis of 2008 when the price of gold surged. Silver also has a positive history and has attracted more attention from investors this year than in previous years. The reputation of precious metals speaks for itself but there are other metals forging their own reputation. Lithium and cobalt have already drawn attention from investors, and with the rise of Tesla, electric cars, and the future of batteries, the demand and value of these metals could skyrocket in the next couple of decades.
Ash Karandawala has no position in any of the shares mentioned in this article. The Motley Fool UK has recommended Fresnillo. 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.