Track the companies that matter to you. It's FREE! Click one of these fan favorites to get started: Apple; Google; Ford.



Should You Invest in Precious Metals Miners Anymore?

Don't let it get away!

Keep track of the stocks that matter to you.

Help yourself with the Fool's FREE and easy new watchlist service today.

The contrasts couldn't be more stark: At a time when demand for physical possession of gold and silver has rarely been higher, the companies charged with extracting the yellow and gray metals from the ground are encountering more opposition. As valuable as precious metals are, perhaps the time has come to stop investing in the mining companies.

While South America is proving to be a particularly divisive front in the battle to expand and exhume the metals from the ground, we shouldn't forget that it's a global effort to stop miners from mining. At the least it's a bid to wrest more money from them.

Freeport-McMoRan (NYSE: FCX  ) is facing the possibility of a month-long strike at its Grasberg mine in Indonesia by some 1,100 construction workers looking for more pay. A few years ago, operations were crippled there by a three-month strike and work didn't resume until Freeport agreed to huge wage hikes. And it was violent, deadly clashes last August at Lonmin's South African Marikana platinum mine where 44 people were killed that have halted operations at one shaft until investigation into the deaths is completed. Africa has long been home to strikes and violence that have plagued miners from Harmony Gold and Gold Fields to Implats and Aquarius Platinum.

Unfortunately the unrest that's plagued South American miners is now reaching up into Central America, with violent protests breaking out at Tahoe Resources  (NYSE: TAHO  )  Guatemalan Escoabl silver mine. One protestor was left dead and some seven members of the Guatemalan National Police were being held captive causing a state of emergency to be declared.

For too long the miners operated with willful abandon, ignoring the environmental harm they caused and the disruption to the lives of the local peoples whose land they exploited. The strikes, protests, and violence were the outgrowth of having ignored those realities. 

Now they must deal with constant and often escalating strife that they've brought on themselves, strife that is hurting their profits enough that investors should question whether it's worth it to throw their money in with the miners.

Of course it's the potential opportunity that makes the industry so attractive. Although Goldcorp (NYSE: GG  )  has lost 40% of its value since last September, hurt by the falling price of gold, it still anticipates production increasing as a result of improving grade quality at Penasquito and Alumbrera just as commercial production gets under way at Pueblo Viejo. 

Even so, it posted a 35% drop in profits, while Barrick Gold (NYSE: ABX  ) saw earnings fall 18% and Newmont Mining (NYSE: NEM  ) witnessed its first-quarter profits tumble 36%. Certainly the lower price of precious metals has hit their bottom lines, but higher expenses and the delays they've suffered are affecting them as well.

Despite the potential for growth, the miners haven't satisfactorily resolved the negative impact they've created and the disruptions are only likely to grow more pronounced. For me, I'm still trusting in owning actual gold and silver rather than the paper stock of the companies that bring it to the surface.

For those who are still looking for mining opportunities, you might want to download the free report, "The Tiny Gold Stock Digging Up Massive Profits." The Motley Fool's analysts have uncovered a little-known gold miner they believe is poised for greatness; find out which company it is and why its future looks bright – for free!

Read/Post Comments (0) | Recommend This Article (2)

Compare Brokers

Fool Disclosure

Sponsored Links

Leaked: Apple's Next Smart Device
(Warning, it may shock you)
The secret is out... experts are predicting 458 million of these types of devices will be sold per year. 1 hyper-growth company stands to rake in maximum profit - and it's NOT Apple. Show me Apple's new smart gizmo!

DocumentId: 2407429, ~/Articles/ArticleHandler.aspx, 9/25/2016 7:11:11 AM

Report This Comment

Use this area to report a comment that you believe is in violation of the community guidelines. Our team will review the entry and take any appropriate action.

Sending report...

Today's Market

updated 1 day ago Sponsored by:
DOW 18,261.45 -131.01 -0.71%
S&P 500 2,164.69 -12.49 -0.57%
NASD 5,305.75 -33.78 -0.63%

Create My Watchlist

Go to My Watchlist

You don't seem to be following any stocks yet!

Better investing starts with a watchlist. Now you can create a personalized watchlist and get immediate access to the personalized information you need to make successful investing decisions.

Data delayed up to 5 minutes

Related Tickers

9/23/2016 4:01 PM
FCX $10.63 Down -0.35 -3.19%
Freeport-McMoRan C… CAPS Rating: ****
ABX $18.11 Down -0.42 -2.27%
Barrick Gold CAPS Rating: ***
GFI $4.94 Down -0.04 -0.80%
Gold Fields CAPS Rating: **
GG $16.66 Down -0.43 -2.52%
Goldcorp CAPS Rating: ***
HMY $3.50 Down -0.05 -1.41%
Harmony Gold Minin… CAPS Rating: **
NEM $39.56 Down -1.21 -2.97%
Newmont Mining CAPS Rating: ***
TAHO $14.00 Down -0.14 -0.99%
Tahoe Resources CAPS Rating: **