CA - Gatos Silver: Why I'm Taking Profits Again

2024-02-12 02:59:30 ET

Summary

• Gatos Silver has outperformed the HUI index and Global X Silver Miners ETF, increasing by almost 40% while others lost 11% and 15%.
• The company has surpassed its mine life target, extending the Cerro Los Gatos mine's life by 2.75 years and increasing silver production by 46%.
• Recent drill results and production numbers continue to exceed expectations, making Gatos a top acquisition candidate for silver producers.
• GATO deserves a premium valuation, but I question how much upside there is over the short term. Other gold and silver mining stocks offer better risk/reward.

In June 2023, Gatos Silver ( GATO ) had plunged from ~$7 to ~$4.50 in a little over a month. Shares quickly went from overbought to oversold, making a round trip in the process.

In an article at the time, I discussed how after the 35% plunge, I was buying back some shares I had sold at the prior top, as the valuation was cheap again....

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