Perhaps the biggest phenomenon on the massive US equity investment scene has been the rise of small investors using commission-less investment brokerage robinhood.com and similar platforms like eToro. In fact, sites like Robinhood are probably the main reason why US stocks have performed so well in the midst of the worst recession the United States has likely seen.
If you look at the list of the most popular stock holdings obtained from Robinhood for the year to date as recorded by the independent website Robintrack.net, these are dominated by technology stocks, so perhaps they largely explain the rise in the NASDAQ index, and also in what are considered risky recovery stocks with investors buying in massive dives, particularly notable in the sudden increases in investment in bankruptcy-announcing companies like Hertz (HTZ) and other companies regarded as Recovery counters most affected by coronavirus such as major airlines and engine manufacturers.
The latest investments are probably a license to lose money, unless one is prepared to invest in the long term, which is probably not in the psyche of the average Robinhood investor. However, there are some interesting signs that perhaps Robinhooders are starting to get a little more sophisticated in their investment options. Or perhaps the commission-free brokerage platform community is expanding to incorporate more experienced investors.
While overly publicized companies like Tesla (TSLA) and FAANG stocks may continue to attract undue attention, lately it is noted that there has been substantial growth among Robinhood users in precious metal stocks and ETFs, and if this accelerates, It could be a real game changer in these relatively small sectors. The apparent surge in interest in precious metal-related stocks and ETFs has been fueled by the growing understanding that many of them are likely to see real growth in the coming months, rather than the more dubious earnings prospects of some of the others. new favorite investors, and the downside risk is, in most cases, considerably more limited. The numbers are still small compared to Robinhood’s most popular investments. But so is the universe of precious metals, and with investment in some gold and silver stocks and ETFs growing vertically, this multiplicity of small investors, if continued, could drive these stocks, ETFs and metal prices, through of flows to bullion ETFs to new heights.
If you look down Robinhood’s stock favorites list, as it appears on July 24thThey are led by Ford Motor (F) and GE (GE), followed by American Airlines (AAL), Disney (DIS) and Delta Air Lines (DAL), all of which are seen as stocks with potential for recovery. And then follow the big tech stocks: Apple (AAPL), Microsoft (MSFT), the overpriced (in our opinion) Tesla with Carnival (CCL), another big recovery action, and another tech action, GoPro (GPRO), doing up out of the rest of the top 10. The next batch includes some other tech favorites like Amazon (AMZN), Snap (SNAP), and Fitbit (FIT),
When we started looking at the precious metals sector, the main stock on the list is Yamana Gold (AUY) with 131, the Direxion Junior Gold Miners (JNUG) ETF, a highly complex ETF that should probably be rejected by inexperienced investors and has Proven to be a big money loser lately, at 188 and Barrick Gold (GOLD) at 201. The world’s biggest gold miner, Newmont (NEM), has only been ranked # 571 on the list so far ! Another gold / silver race, Agnico Eagle (AEM) has so far languished at number 1873, but is only just beginning to attract attention. The SPDR Gold Trust (GLD) ETF is at 213, while the large silver ETF (SLV) is at 274, but followed by the top silver mining stocks to show, Hecla Mining (HL), at 307. Other mining stocks listings will be highlighted include Kinross Gold (NYSE: KGC) at 360. New Gold (NGD) at 380, while the best junior we could find was Northern Dynasty (NAK), which entered 171. Why Northern Dynasty should have such a high rank defeats us, but the reversal effect of Robinhood has almost certainly been held less responsible in part for the company’s large share price rise since April.
What could be the effect of investment platforms like robinhood.com? They distort the market and in relatively thin market sectors such as precious metal ETFs and stocks, they realize that these could be a better bet than general stocks in the current economic climate could have a side effect. While junior miners might be attractive to the gameplay among Robinhooders, listed juniors in the United States are relatively few and far between, and we suspect that the more serious investors the industry can turn to are likely to limit their investments to large precious metal ETFs (GLD and SLV) and major gold and silver mining companies like NEM, GOLD and KGC where they see downside risk as much more limited and these stocks also pay dividends which improves their suitability for investment.
The most speculative element may be for mining stock ETFs like the GDX and the riskier GDXJ, an ETF that focuses on selected junior miners, respectively, numbers 414 and 1039 on the stock popularity list at robinhood.com. We also suggest the safest royalty companies such as Franco-Nevada (FNV) and Royal Gold (RGLD) – No. 1768 and 2687, respectively, at robinhood.com, which have obviously not yet won adherents to investing on the site, but seems to be starting to build followers. The more silver-oriented Wheaton Precious Metals (WPM) at 783 is already building well, given the specific interest in investing in silver right now.
As gold has hit a new all-time high in the mid-$ 1,900 as I write, while overall stocks continue to be vulnerable to further declines, increasing media attention to gold and silver in particular will seep into the little ones. investor. The sector had been largely ignored by the retail investor, but the increasing coverage of the mainstream media, particularly if the price of gold exceeds its all-time high of $ 1,922, will surely highlight the potential gains to be made as the US economy remain stagnant due to the COVID-19 crisis.
Precious metal mining stocks should offer leverage over gold and silver prices; almost everyone should post strong gains at current precious metal prices, and many pay decent dividends. Therefore, in the coming weeks, if gold and silver continue to perform positively as it looks like they are ready to do, the Robinhood effect could give a boost to precious metal related stock prices. We recommend the following as an investment: GLD and SLV among precious metal ETFs, NEM, GOLD, KGC, AUY, NGD and AEM among gold miners, HL and PAAS as silver counters, FNV, RGLD and WPM as royalties / companies transmission, and GDX and GDXJ for riskier junior gold and gold ETFs.
That is a fairly comprehensive list. It all appears to offer relatively low downside risk and good upside potential as gold and silver appear poised for further breakthroughs with the prospect of supercharged momentum from Robinhooders and other new retail investors using commission-free investment platforms . This assumes they grow to recognize the relatively safe potential of precious metal stocks and ETFs as an alternative to what we see as overly risky overall stocks as the US potentially sinks deeper and deeper into recession.
Divulge: I / we have no positions in any mentioned action, and we have no plans to initiate any positions within the next 72 hours. I wrote this article myself and express my own opinions. I receive no compensation for it (other than Seeking Alpha). I have no business relationship with any company whose shares are mentioned in this article.
