Fool's Gold Report: The Waiting Game Continues for Gold

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 has been almost as volatile as the stock market so far in 2014, with the yellow metal off to a strong start to 2014 as investors look for the best bargain opportunities after a terrible year in 2013. Today, though, even a soaring stock market wasn't enough to push precious metals strongly in either direction as investors wait for the broader picture of the jobs market that they'll get from the January employment report tomorrow morning. April gold futures settled up just $0.30 to $1,257.20 per ounce, and March silver futures were up modestly as well, gaining $0.12 to $19.93 per ounce. Bullion ETFs traded in similar fashion, with the SPDR Gold Shares (NYSEMKT: GLD  ) down 0.1% as of 2:45 p.m. EST while the iShares Silver Trust (NYSEMKT: SLV  ) picked up 0.6%. Other metals were mixed, with platinum falling $4 per ounce to $1,372 while palladium rose $2 to $709.

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

The main reason why metals are stuck in a rut today has to do with the uncertainty about the direction of the U.S. economy. Until recently, economic data suggested that the U.S. was firing on all cylinders, heading for a smoother recovery that would no longer require help from the Federal Reserve in order to sustain itself. But signs of a possible slowdown have made investors more cautious in their expectations of the Fed's future moves, raising the possibility that the central bank will keep at least some level of bond-buying activity for longer than previously expected. The Fed won't want to reverse course unless it becomes absolutely necessary, and it's possible that it will argue that one-time seasonal factors, rather than lasting structural changes, led to a brief interruption in the economy's growth path. But the employment report tomorrow will give policymakers a key data point to consider in their deliberations.

Mining stocks were similarly flat, with the Market Vectors Gold Miners Index (NYSEMKT: GDX  ) up just a penny as of 2:45 p.m. EST. But Silver Standard Resources (NASDAQ: SSRI  ) continued to gain, rising another 3.6% as investors get increasingly excited about its purchase of the Marigold mine in Nevada, which will give Silver Standard a more dependable source of production to go with its Pirquitas mine in Argentina. The miner should benefit if it can get relatively high costs at the mine to fall.

Tomorrow's jobs report will likely move the stock market, but gold investors should also pay close attention. What it says about the direction of the economy could determine whether gold's rally lasts during the rest of 2014.

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Read/Post Comments (6) | Recommend This Article (5)

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 February 07, 2014, at 12:04 AM, TigerPack1 wrote:

    I like the idea of your daily gold blog.

    I would suggest something of a table, listing the daily price changes in the precious metals ETFs - GLD, SLV,PALL, PPLT, and the miner ETFs - GDX, GDXJ, plus 10-15 of the same large cap gold miners, U.S. Canada, South Africa names, plus maybe one or two exploration companies in the news that day.

    I don't like the name of Fool's Gold, since I felt very slighted as I put more and more money into precious metals the last 3-6 months. I tend to own them in large percentages of my portfolio when everyone is giving up on them. I would say those owning gold today are quite the opposite of fools or holders of "fools gold." MF's Daily Gold Report, perhaps, or Motley Fool's Daily Gold Blog.

    Gold and silver are breaking above trendlines drawn from their highs the last 1.5 years the last week and next. If tomorrow's unemployment number is too hot or too cold, we could see a big up day in the metals.

    My biggest reason for owning gold/silver/platinum group, oil and iron and coal, etc in early 2014 revolves around my fear the U.S. Dollar is preparing a large swoon this year. We could easily move from today's high confidence zone in the U.S. financial markets toward the end of the FED's PONZI scheme and a range of options for it to blow up on the world. Plenty of opportunities for the U.S. bond market bubble to pop and attacks on the confidence in the U.S. reserve currency status (supremacy) could take place soon, with little or no warning to investors. I could list about 10 potential black and blue swans presently, but gold and silver will be an early warning of trouble for the financial system and Dollar. They both appear ready to explode higher to me, and the massive paper short scheme to drive gold prices down the last few years is all but impossible to carry on, in my opinion.

    Very quietly the last 2-3 weeks, grains, oil/energy, the precious metals, many soft commodities and more are receiving a strong bid, and are moving higher in price at the same time.

    Plus, I am a firm believer that the Dow Industrial/Gold ratio will approach 3 to 1 or even 2 to 1 before the economy is rebalanced properly and we can grow stock prices and wages for the common man beyond the 2013 highs. At nearly 14 to 1 in December 2013, we could see a quick convergence of declining stock market values and swiftly rising gold this year and next. In the Depression years gold traded near 2 to 1 during 1933-34, with stocks tanking from 20 to 1 in 1929. The late-1970s to early 1980s period saw a nearly 1 to 1 ratio as stocks stagnated and gold prices soared for a decade, from around 20 to 1 in the mid 1960s.

    Keep up the good work.

    -TigerPack

  • Report this Comment On February 07, 2014, at 9:05 AM, TMFGalagan wrote:

    @TigerPack1 - Thanks for your comments. The Fool's gold pun is almost too good to pass up, but I understand your comments and will think about it.

    On the table format, the challenge I have is not wanting to overwhelm people with *too* many numbers and stocks, but also wanting to give those who track the sector closely the information they need. I haven't found the right balance yet, but I'll think about what a table could provide and see if it works better than the text description.

    Again, thanks much for your feedback; I really appreciate it!

    best,

    dan (TMF Galagan)

  • Report this Comment On February 07, 2014, at 9:33 AM, TigerPack1 wrote:

    I have my own created Yahoo! portfolios to track sectors, like a table of gold stocks.

    Perhaps your tech guys can create some sort of table/spreadsheet that will update to latest quotes automatically when a reader clicks on your story.

    I think it would be useful for regular MF readers to have such if precious metals begin a large advance.

    Having a good list of 20-30 precious metals quotes alongside your daily commentary would be a win-win I think.

    I like having Kitco's pricing page on my browser favorites. It looks like MF has a separate web page for each article. Having one "go to" source for updated gold related quotes and commentary under the same webpage name each day would make it easy to reload and add to my favorites (others may link to it in their stories for example to build daily traffic). Having the same webpage address would encourage me to click on each day's blog to find your comments and information, without having to find a link to it on a different website like Yahoo! Finance. Maybe MF could move the previous day's commentary to a stand alone webpage listing once you post a new article.

    -TigerPack

  • Report this Comment On February 07, 2014, at 11:23 AM, TigerPack1 wrote:

    Anyone else notice the spike in commodities taking place the last 3 weeks or so???

    DBA - Agriculture ETF is up +5% real quick, the best showing over 2-3 weeks since mid-2012.

    Natural gas and propane rise is starting to get noticed in mainstream press.

    Crude oil is rising nicely, despite fixation on Chinese slowdown.

    Precious metals are breaking out of 1.5 year downtrend line this week.

    All we need is a a turn in the Dollar lower, and believe me, commodity inflation could be THE STORY this spring in the press.

    Out of control money printing is to blame, and we are a good 1 to 2 years behind the usual curve in tightening. Actual tightening is still a good year away, at the earliest. Tapering news is just less out of control money printing. Until the FED is selling its Treasury hoard, we are not tightening by definition. BEN has happily retreated to Caymans, out of sight of U.S. authorities, in case PONZI money printing backfires. Good for him!

  • Report this Comment On February 07, 2014, at 2:45 PM, TigerPack1 wrote:

    Another interesting tidbit -

    Both gold and silver have been trading ABOVE their 50-day MAs with little fanfare.

    Today both of the 50-day MAs are turning HIGHER also, and will stay in rising trends with just flat precious metals prices in U.S. Dollars.

  • Report this Comment On February 14, 2014, at 4:32 PM, Momentum21 wrote:

    TigerPack1 - I am with you. Typically I have not been a fan of "investing" in the shiny metal but the miners make a compelling play here even if gold and silver prices simply stabilize. SSRI, NEM, ANV, BVN and AUMN are a few I am playing along with GDX.

    Coal is also interesting via WLT, BTU, ANR, ACI. I am long those names.

    I have about $150k thrown at my theory. I was a bit early to the party (started late last summer) but SSRI gains of 50% has me in good shape as of today at least.

    It would be fun to have a big ripper day on the metals to truly put the miners on the board. : ) Good luck!

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