Fool's Gold Report: Metals Fall on Stock Market Gains, Regulatory Scrutiny; Thompson Creek Metals Soars

Although we don't believe in timing the market or panicking over daily movements, we do like to keep an eye on market changes -- just in case they're material to our investing thesis.

For precious-metals investors, the poor performance in the stock market has been a big contributor to a nice beginning for 2014. Today, though, a turnaround in stocks punished gold and other metals, with spot gold dropping about $8 per ounce to $1,245, sending SPDR Gold (NYSEMKT: GLD  ) down almost 1%. Silver fell $0.16 per ounce to $20.25, with iShares Silver (NYSEMKT: SLV  ) falling 1.3% as a result. Platinum was hit hardest on a percentage basis, falling $16 to $1,425, while palladium prices dropped $5 to $734.

The interesting news hitting the gold market came from the Federal Reserve, which started a review of the way commercial banks engage in commodities businesses. The practice was criticized last summer, as Goldman Sachs and JPMorgan Chase were sued in connection with aluminum warehouses that were allegedly involved in a hoarding scheme that resulted in higher prices for the metal than market conditions warranted. The Fed review will look for conflicts of interest and the potential systemic impact of commodity operations, with a request for public comment on proposed rules. JPMorgan has already announced that it would exit the physical commodities business, but the impact on the precious-metals markets could be substantial.

Mining stocks generally followed bullion lower, with the Market Vectors Gold Miners ETF (NYSEMKT: GDX  ) falling 2.4%. But bucking the downward trend was Thompson Creek Metals (NYSE: TC  ) , which soared 18% after announcing a 34% jump in molybdenum production for 2013 compared to 2012 as well as favorable updates on its Mt. Milligan gold and copper mine. Now that Thompson Creek expects Mt. Milligan to reach ordinary commercial production levels during the current quarter, investors finally stand a chance of seeing the full potential of the lucrative mine help Thompson Creek's long-suffering results.

In the near term, gold investors should expect the price of the yellow metal to track the inverse of stock market returns. Yet with some signs of heightened activity in the space, gold could continue to rebound modestly even if stocks fail to implode in 2014.

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  • Report this Comment On January 14, 2014, at 11:40 PM, techpatriot wrote:

    This statement is misleading and incomplete.

    " Thompson Creek expects Mt. Milligan to reach ordinary commercial production levels during the current quarter ".

    TC will "announce" commercial production in Q1, which is a arbitrary internal metric the company uses defined as 60 percent of total production for 30 consecutive days.

    The CEO has said Mt Milligan will be cash flow positive in "mid 2014" and should achieve full operating capacity by the end of Q4 2014.

    TC may not be a "5 bagger" overnight, but it should be a double this year and be working on a triple in 2015.

  • Report this Comment On January 16, 2014, at 9:00 AM, JustMee01 wrote:

    With regard to that TC press release Jan 13th reporting 2013 sales and production, what exactly does Gold "payable" refer to.

    The company reports concentrate production, which I get. That's projected metal content of concentrate being stockpiled.

    It reports sales, which I get. That's the metal content of what's been shipped and actually sold.

    There's also a third column in the copper, gold and silver chart labeled "payable". What the heck does that column refer to?

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