Fool's Gold Report: Inflation Data Leave Gold, Metals Little Changed

Even a fairly sharp increase in consumer prices in December wasn't enough to send gold higher, as core inflation remained in check. Find out why miners outperformed again today.

Jan 16, 2014 at 5:55PM

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.

The latest report on consumer inflation didn't lead to big waves in the precious-metals markets, as a jump in the headline figure didn't fall through to a corresponding increase in core inflation. As a result, spot gold was up less than $1, to $1,243, with SPDR Gold (NYSEMKT:GLD) gaining 0.1%. iShares Silver (NYSEMKT:SLV) actually lost a quarter of a percent, with silver falling almost $0.10, to $20.10 per ounce. Platinum-group metals were narrowly mixed, with platinum gaining $1, to $1,426, while palladium gave up $1, to $740.

Gold And Silver

Image sources: Wikimedia Commons; Creative Commons/Armin Kubelbeck.

Gold investors hoping for a pickup in inflation didn't get the news they were looking for from the Bureau of Labor Statistics today. Even though December's headline number rose 0.3%, which was the highest level since June, most of the gain came from a substantial jump in energy prices that left the core CPI up just 0.1%. Looking longer term, consumer prices rose a total of 1.5%, marking the first two-year period since 1997 and 1998 that inflation remained below the 2% level that is the Federal Reserve's unofficial target inflation rate. Meanwhile, in Europe, annual inflation rates across the Eurozone were even weaker at 0.8%, with four of the continent's nations posting deflationary trends in December.

But mining stocks continued to do better than the price of gold, with Market Vectors Gold Miners ETF (NYSEMKT:GDX) jumping more than 1%. Newmont Mining (NYSE:NEM) led the way among major gold producers, rising 1.6% as investors focus on the company's low-cost portfolio of production facilities. As Fool contributor Rupert Hargreaves noted yesterday, Newmont has a substantial portfolio of profitable mines, with even its higher-cost South American properties sporting all-in sustaining cash costs below $1,100 per ounce. If Newmont can follow the trend of its peers in finding ways to cut costs even further, it could lead to higher profits even if gold prices prove unable to rise in the near term.

Meanwhile, precious-metals investors need to keep their eyes on rhetoric from Federal Reserve officials leading up to their next meeting at the end of the month. With so much riding on the future course of monetary policy, investors could see big moves if the Fed deviates from its perceived commitment toward continuing its tapering of quantitative easing.

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Fool contributor Dan Caplinger has no position in any stocks mentioned. You can follow him on Twitter @DanCaplinger. The Motley Fool has no position in any of the stocks mentioned. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

4 in 5 Americans Are Ignoring Buffett's Warning

Don't be one of them.

Jun 12, 2015 at 5:01PM

Admitting fear is difficult.

So you can imagine how shocked I was to find out Warren Buffett recently told a select number of investors about the cutting-edge technology that's keeping him awake at night.

This past May, The Motley Fool sent 8 of its best stock analysts to Omaha, Nebraska to attend the Berkshire Hathaway annual shareholder meeting. CEO Warren Buffett and Vice Chairman Charlie Munger fielded questions for nearly 6 hours.
The catch was: Attendees weren't allowed to record any of it. No audio. No video. 

Our team of analysts wrote down every single word Buffett and Munger uttered. Over 16,000 words. But only two words stood out to me as I read the detailed transcript of the event: "Real threat."

That's how Buffett responded when asked about this emerging market that is already expected to be worth more than $2 trillion in the U.S. alone. Google has already put some of its best engineers behind the technology powering this trend. 

The amazing thing is, while Buffett may be nervous, the rest of us can invest in this new industry BEFORE the old money realizes what hit them.

KPMG advises we're "on the cusp of revolutionary change" coming much "sooner than you think."

Even one legendary MIT professor had to recant his position that the technology was "beyond the capability of computer science." (He recently confessed to The Wall Street Journal that he's now a believer and amazed "how quickly this technology caught on.")

Yet according to one J.D. Power and Associates survey, only 1 in 5 Americans are even interested in this technology, much less ready to invest in it. Needless to say, you haven't missed your window of opportunity. 

Think about how many amazing technologies you've watched soar to new heights while you kick yourself thinking, "I knew about that technology before everyone was talking about it, but I just sat on my hands." 

Don't let that happen again. This time, it should be your family telling you, "I can't believe you knew about and invested in that technology so early on."

That's why I hope you take just a few minutes to access the exclusive research our team of analysts has put together on this industry and the one stock positioned to capitalize on this major shift.

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David Hanson owns shares of Berkshire Hathaway and American Express. The Motley Fool recommends and owns shares of Berkshire Hathaway, Google, and Coca-Cola.We Fools don't all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

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