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Fool's Gold Report: Metals Soar as Gold Climbs to Highest Levels in 2014

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.

Gold prices jumped to their best levels in 2014 today, as a poor reading from the University of Michigan's Consumer Sentiment Index led to some uncertainty about whether the Federal Reserve will taper its bond-buying activity as quickly as some fear. Spot gold prices jumped $11 per ounce, to $1,254, sending the SPDR Gold Trust (NYSEMKT: GLD  ) to gains of nearly 1%. Silver rose $0.23 per ounce, to $20.33, with iShares Silver (NYSEMKT: SLV  ) rising 0.8% on the session. Platinum led the way higher today with a $22 rise, to $1,451, while palladium picked up $6 per ounce, to $747.

One factor that always plays a role in the platinum market is the state of the labor market in South Africa, which has some of the world's biggest platinum producers. With reports of a strike vote against Impala Platinum and Lonmin in South Africa, a temporary drop in platinum production could support prices in the near term. If workers at Anglo American follow suit, it could hurt the three top producers, and bring more than half of the world's platinum output to a standstill.

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

Also helping to bolster the market were positive calls from Morgan Stanley in the metals markets. The analyst sees palladium and copper performing best, but it made a full-year gold forecast of $1,313 per ounce, with platinum coming in at $1,639, and silver at $21. Supply conditions in the platinum-group metals make the area more attractive than gold, given the negative impact that Fed tapering will likely have on gold demand.

Mining stocks performed well, with the Market Vectors Gold Miners ETF (NYSEMKT: GDX  ) climbing 3%. Smaller miners posted even sharper gains, with AuRico Gold (NYSE: AUQ  ) gaining more than 7% on the general strength in the market. The company's preliminary operational results announced earlier this week included operational results that just hit the lower end of its production guidance, although cash costs at $676 for the full 2013 year came in above guidance of $565 to $645 per ounce, due largely to much higher-than-expected costs at its Young-Davidson mine. Still, AuRico has room to run higher if gold prices can maintain their higher levels from here.

Even somewhat disappointing news got positive results. Coeur Mining (NYSE: CDE  ) said that silver production actually dropped 6% for the full 2013 year, with production levels at 17 million ounces. Yet, gold production hit a record of just over 262,000 ounces, rising 16%. Coeur gave production guidance that points to modest growth in silver production at the expense of roughly 10% to 15% reduction in gold production levels. Favorable cost projections could help the company be more profitable in the future, even as Coeur tries to emphasize higher-margin operations over simply maximizing output volume.

Investors can take heart from the recent gains in gold, which have defied expectations that 2014 would continue to be a weak year for precious metals. Still, gold could face plenty of headwinds throughout the remainder of the year, making 2014 a challenging year for those trying to pick a direction for the gold market.

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Read/Post Comments (2) | Recommend This Article (1)

Comments from our Foolish Readers

Help us keep this a respectfully Foolish area! This is a place for our readers to discuss, debate, and learn more about the Foolish investing topic you read about above. Help us keep it clean and safe. If you believe a comment is abusive or otherwise violates our Fool's Rules, please report it via the Report this Comment Report this Comment icon found on every comment.

  • Report this Comment On January 18, 2014, at 12:01 AM, EchoVectorVEST wrote:

    For a very revealing EchoVector Pivot Point Analysis of the Gold Metals Market, focusing on the GLD ETF and the GTU ETF and the /GC E-mini Gold Metals Futures price path patterns and price forecasts for the last decade, and to view very informative and illustrative EchoVector Analysis generated Trader's Edge FrameCharts and Forecast Price GuideMaps of these important Gold metals market proxy securities - many of which highlight and illustrate key regime change cycle echovectors (8-year), key senatorial cycle echovectors (6-year), key federal reserve bank cycle echovectors (5-year), key presidential cycle echovectors (4-year), key congressional cycle echovectors (2-year), key annual echovectors (1-year), key quarterly echovectors (3-months), key monthly echovectors (monthly), key FOMC announcement echovector (also monthly) key bi-weekly echovectors, key weekly echovectors, and key daily echovectors at work within their highly liquid and highly traded and invested markets - just Google search GOLDPIVOTS or GOLDINVESTORWEEKLY or MARKETINVESTORWEEKLY, or SILVERPIVOTS, if you are an active gold or silver investor, swing trader, or day trader, and wish to review this powerful and free and advanced "Investor's and Trader's Edge" market intelligence. also Google search the article "Revisiting Gold: This Week's EchoVector Pivot Point Price Analysis And Advanced Position Management Approach For The Gold Metals Market: 1/12/14" published at GOLDPIVOTS and at THE MARKET PIVOTS FORECASTER as well.

  • Report this Comment On January 18, 2014, at 9:35 AM, borneofan wrote:

    I am not certain that I understand "given the negative impact that Fed tapering will likely have on gold demand".

    Since gold has virtually no industrial demand, there is only jewelry demand (which would fall under high end consumer discretionary spending, think Blue Nile), physical coin demand (insurance against currency destruction for the common man, plus collectible discretionary spending), and bullion held by government and ETF's (the 800 lb gorillas in the room).

    I can see how jewelry demand is damped by the economic destruction caused by QE currency devaluation (it is hard to buy jewelry when you can't buy food). Likewise for physical coin, the demand boost by those desperately trying to protect their dwindling assets from devaluation won't match the contraction from those who can't afford food and shelter.

    That leaves the dark markets of the central banks, and slightly less dark virtual markets of ETF's.

    Supply is controlled by capital, labor, and government costs for mining and refining relative to current metal prices.

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Dan Caplinger

Dan Caplinger has been a contract writer for the Motley Fool since 2006. As the Fool's Director of Investment Planning, Dan oversees much of the personal-finance and investment-planning content published daily on With a background as an estate-planning attorney and independent financial consultant, Dan's articles are based on more than 20 years of experience from all angles of the financial world.

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