Fool's Gold Report: Miners, Bullion Jump As Investors Ignore the Fed's Taper

Plunging stock markets were enough to get investors to flee back into the gold and silver market, even as platinum-group metals remained flat. Find out why mining stocks rose big today.

Jan 29, 2014 at 7:02PM

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.

Stock market volatility again had a big impact on the precious-metals markets today Wednesday, with another downward move for the Dow of nearly 200 points helping to support substantial gains in gold and silver. SPDR Gold Shares (NYSEMKT:GLD) climbed about 1.25% today, following gold's $12 per ounce rise to $1,268. Silver's less substantial gain of $0.15 per ounce to $19.71 led to a 0.9% rise for the iShares Silver Trust (NYSEMKT:SLV). Platinum-group metals were mixed, with platinum rising $2 per ounce to $1,409 but palladium giving up $2 per ounce to $713.

Many expected the Federal Reserve's monetary-policy announcement to be potentially a market-moving event for gold, but for the most part, the Fed's further tapering of $10 billion per month from its bond-buying activity was exactly what investors had thought the central bank would do. As a result, gains in the gold market were more likely tied to emergency action to help stabilize emerging markets, with Turkey dramatically raising its key lending rates, while South Africa and India have made more modest moves over the past couple of days.

Moreover, news from the mining front helped support bullion prices as well, as the Market Vectors Gold Miners Index (NYSEMKT:GDX) jumped 2.6%. Hecla Mining (NYSE:HL) reported its preliminary production results from 2013, with the stock rising almost 2% as Hecla said that it mined 8.9 million ounces of silver and 120,000 ounces of gold last year. Cash costs more than doubled in the fourth quarter, but that was mostly because the company's Lucky Friday mine came back on line last year and had higher costs than its Alaskan Greens Creek mine. Looking forward, Hecla is optimistic about 2014, projecting 9.5 million to 10 million ounces of silver production and 180,000 gold ounces for the year.

Gold And Silver

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

But not all mining stocks rose. Coeur Mining (NYSE:CDE) lost almost 1% after bond-rating agency Moody's downgraded the silver miner's corporate-family bond rating and existing senior unsecured note rating by one grade each, pushing Coeur's bond rating further into junk bond territory. Despite Coeur's efforts to cut costs, Moody's looked unfavorably at its relatively high expense structure, especially with the threat of lower bullion prices in the future. The move shows the struggles that mining companies are facing right now as they hope that further declines in gold and silver prices don't occur.

Now that the Fed has acted, the big question for gold investors is whether bond yields start to rise. So far, bonds are behaving well in light of falling stocks, but if rates start to rise, it could put an end to the rebound we've seen in gold and silver so far in 2014.

Can you profit from gold now?
If you think gold has room to run, there are some smart stock choices you can use to profit. The Motley Fool's new free report, "The Best Way to Play Gold Right Now," dissects the recent volatility and provides a guide for gold investing, including two stocks worth looking at closely. Click here to read the full report today!

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 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.

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.

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