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Despite Recent Gold Volatility Analysts See Paramount Gold And Silver Corp. (NYSE: PZG) As A Buy - Fred Dunsel (03/21/12)

 March 21, 2012 11:24 AM


Last Friday, Paramount Gold and Silver Corp. (NYSE:PZG) closed at $2.25, marking a 6.25% loss for the week. Last week's performance was primarily due to the declining gold prices over the week. Since trading above $2.70 in February, Paramount has been declining ever since, although it is currently still up 9.2% for the year. A natural resource company, with a market cap of $308 million, Paramount is involved in the acquisition, exploration and development of gold, silver and other precious metals in the US and Mexico.

Last week, the seven-year old company, based in Winnemucca, Nevada, announced assay results which significantly expanded the size of its new high-grade gold discovery south of the La Union zone at its San Miguel project. This also came after its announcement in February of higher assay results from its Don Ese and La Union veins, as well as the discovery of the highest silver grades yet at its San Antonio silver deposit. While the news initially helped prop up the stock, ongoing pressure on silver and gold prices limited its gains and eventually pushed it down as well.

[Related -52-Week Highs & Lows: EMC, MOT, VZ, AAPL, CMCSA, ATML, PZG, SHZ, KOG, BIG, BTFG, CLSN, FREE, IDRA, MDCI]

Meanwhile, the company's Sleeper gold project in Nevada is also returning better drilling results. Nearly 75% of the holes drilled returned intercepts with grades above 0.2 grams of gold per tonne, including 18 holes with significant intervals averaging more than 0.4 grams per tonne.

Given the above, analysts are optimistic about Paramount's prospects, though they are also aware of the volatility of gold and silver prices in the coming months. Moreover, the fact that the stock is almost half of its 52-week high of $4.17 also provides much room for a technical rebound. Paramount is one of those gold stocks that performed well last year, and is widely predicted to do as well in 2012. It has even been forecasted by some to reach between $3.50 and $4.00 per share this year. Hence, for now, the current consensus rating for Paramount is a "buy".

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