Fool's Gold Report: So Much for Safe Havens

Gold climbed only a small amount, and other precious metals declined even as stocks plunged. Find out the details here.

Jan 24, 2014 at 6:46PM

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.

Yesterday, gold returned to its historical role as a safe haven for investors, climbing sharply as stock markets dropped. But today's more than 300-point plunge for the Dow led to only minimal gains in gold prices, and the rest of the precious-metals complex actually posted some fairly nasty declines. The SPDR Gold Shares (NYSEMKT:GLD) rose 0.4%, as spot gold prices climbed just $4 per ounce, to $1,269, while silver prices fell by about $0.10, to $19.91 per ounce, sending iShares Silver (NYSEMKT:SLV) down half a percent.

The big action in precious metals was in platinum and palladium, which plunged on fears about a drop in demand based on their industrial uses. Platinum dropped $25 per ounce, to $1,427, while palladium fell $10 per ounce, to $733. With concerns about levels of manufacturing activity, the natural question for platinum-group metals investors to ask is whether demand will be sustainable at current levels. Any pullback in auto demand, for instance, could reduce the need for metals purchases to make catalytic converters, a key use of platinum and palladium.

Gold And Silver

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

Traditionally, gold has tended to act as a stronger safe haven in a currency crisis, and currency fears were a big part of what drove stock markets lower today. Record-low levels in the Turkish lira, and continuing drops in the Brazilian real and the South African rand, showed the rising levels of nervousness about the sustainability of growth in emerging-market economies. In that light, gold's tepid gains today suggest that investors are gravitating toward developed-nation currencies rather than the yellow metal as a place to ride out an emerging-market storm.

Among mining stocks, the Market Vectors Gold Miners ETF (NYSEMKT:GDX) fell by 0.2%, bucking a trend toward higher share prices for the sector. Base-metals plays underperformed precious metals, with Alcoa (NYSE:AA) falling more than 5%, and Freeport-McMoRan Copper & Gold (NYSE:FCX) giving up 2.7%. Given fears of economic pressure going forward, base metals are arguably more vulnerable to economic disruptions than their precious-metal counterparts, and they've also performed better recently in the hope that an economic recovery would spread from the U.S. across the globe. Now that more recent events have called that theory into question, Alcoa, Freeport, and other producers of industrial metals could continue to underperform in the future.

For gold investors, today's small gains were somewhat disappointing. For gold to resume its bull market, it needs to take better advantage of opportunities like this to pull in money from scared investors in other markets. Otherwise, gold might take a long time to return to its record highs of just a few years ago.

Don't wait for the best investment you can find
Both gold investors and stock investors know that there's a huge difference between a good investment and an investment that can make you rich. The Motley Fool's chief investment officer has selected his No. 1 stock for 2014, and it's one of those stocks that could make you rich. You can find out which stock it is in the special free report "The Motley Fool's Top Stock for 2014." Just click here to access the report and find out the name of this under-the-radar company.

Fool contributor Dan Caplinger owns shares of Freeport-McMoRan Copper & Gold. You can follow him on Twitter @DanCaplinger. The Motley Fool owns shares of Freeport-McMoRan Copper & Gold. 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.

Click here to learn about this incredible technology before Buffett stops being scared and starts buying!

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.

©1995-2014 The Motley Fool. All rights reserved. | Privacy/Legal Information