Fool's Gold Report: Precious Metals Rise, but Miners Drop

Gold posted modest gains, but silver and palladium did even better. Find out why.

Feb 5, 2014 at 7:06PM

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.

Judging from the way that gold and the stock market have traded recently, investors who are unfamiliar with the precious metals markets might naturally assume that gold prices and stocks always move in opposite directions. But sometimes, the same things that support stocks also point to strength in gold and other metals, and today's price moves reflected some of those factors. Spot gold rose $3 per ounce to $1,258 today, sending the SPDR Gold Shares (NYSEMKT:GLD) to a 0.25% gain. The iShares Silver Trust (NYSEMKT:SLV) delivered a more impressive 1.7% gain, with the metal jumping $0.39 per ounce to $19.90. Platinum rose $5 per ounce to $1,376, while palladium jumped $8 per ounce to $707.

Gold And Silver

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

Admittedly, gold showed signs benefiting much more strongly when the stock market posted substantial losses right after the open, with a brief spike above the $1,270 level. But even as the Dow recovered to nearly break even, precious metals held onto much of their gains. One explanation came from the monthly ADP private-sector jobs report, which included lower employment figures than analysts had expected to see. With yet another data point suggesting an economic slowdown, many gold investors hope that the Fed will reverse course on its tapering policy and keep making sustained moves to stimulate the economy. Anything that keeps interest rates low and pushes more liquidity into the financial system could help support gold prices, as investors will have fewer alternatives to provide both income and growth potential.

But mining stocks posted big declines, with the Market Vectors Gold Miners Index (NYSEMKT:GDX) falling 1.6%. Barrick Gold (NYSE:ABX) led major gold miners down, falling 3% even in the aftermath of selling its minority stake in the Marigold mine in Nevada to Silver Standard Resources (NASDAQ:SSRI). Given that Silver Standard jumped 6% today, it's possible that investors saw the silver company as getting the better end of the deal at Barrick's expense.

Still, the disparity between mining stocks and bullion today is a troubling reversal of an earlier trend that established itself recently, when miners rose before bullion's recovery. If mining stocks retain their status as leading indicators, it could prove problematic for the sustainability of the rise in gold prices so far in 2014.

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Dan Caplinger and The Motley Fool have 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."

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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." 

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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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