Why precious metal stocks are glowing this week

Precious metals stocks have been precious over the past few days. That's because many of them have risen as the materials they mine and sell have risen.

According to Standard & Poor's Global Market Intelligence(S&P Global Market Intelligence )compiled data.Hercules Resonance IndustryCompany (HeclaMining)(NYSE: HL)The stock price rose nearly 13% in one week, realizing a double-digit gain.Sibanye Stillwater (NYSE: SBSW)As such, its price has increased by 11%.Ero Copper (NYSE: ERO)Slightly behind, but still making healthy gains, its up over 8%.

These metals have become even more valuable.

Whereas, the performance and stock price of any precious metals company is largely dependent on the demand for these materials, the performance of Herrera, Sibanye-Stillwater, Ero, and many of their peers have done well recently. It is comforting to know that Hercules, Sibanye-Stillwater, Ero and many of their peers have done well recently.

Over the past month.Standard & Poor's GSCI Precious MetalsThe index has risen by nearly 11%, clearly outpacing theStandard & Poor's 500Indices. In the past week alone, the S&P GSCI Precious Metals Index has risen by more than 5% amid a slight decline in the S&P 500 (1%).

Recently, the prices of gold and silver have reached new highs. One of the main motivating factors has been the widespread expectation that the Federal Reserve will cut interest rates. Lower interest rates tend to drive up the price of precious metals because they are more competitive with safe investments such as bonds. Gold, silver, etc. are considered to have more intrinsic value than bonds because the interest rate on bonds decreases as interest rates fall.

In addition, the growth of the massive Chinese economy has also played a role. China's real estate sector is in a notorious slump, and investors there have been reallocating their money to assets that are considered relatively stable and safe. For many, this means precious metals.

In addition, the relatively volatile geopolitical situation also makes the global central banks feel nervous. In this environment, central banks like to hedge by stockpiling such materials.

Will this rise continue?

The million-dollar question, however, is whether this rally can be sustained. I think so, mainly because Fed officials are wavering in their eagerness to cut interest rates, while overseas investors and central banks remain hesitant to do so. Gold in particular is a comforting investment for many individuals and organizations, and they should continue to seek comfort in gold and other precious metals.

Should you invest $1,000 in resonance resonance now?

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Eric Volkman does not own any of the shares listed above.The Motley Fool does not own any of the shares listed above.The Motley Fool has a disclosure policy.

Why Precious Metals Stocks Are Glorious This Week