Fool's Gold Report: Gold Tops $1,300 Following Barrick, Goldcorp Earnings

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 investors have largely been disappointed with the performance of the Dow Jones Industrials (DJINDICES: ^DJI  ) lately, as even today's gain of 56 points as of 3:30 p.m. EST has still left the Dow down more than 500 points, or more than 3%, from where it began the year. But gold investors have seen an impressive recovery, with the precious metal climbing above the $1,300 level for the first time since early November. April gold futures settled at $1,300.10 per ounce, up $5.10, while March silver climbed about a nickel to finish just under $20.40 per ounce. As of 3 p.m. EST, spot prices remained above the $1,300 level as well, and SPDR Gold Shares (NYSEMKT: GLD) climbed 0.9% while iShares Silver Trust (NYSEMKT: SLV) gained 1.6%. Earnings news from Goldcorp (NYSE: GG  ) and Barrick Gold (NYSE: ABX  ) also played a big role in gold's move today.

Metal

Today's Spot Price and Change From Yesterday

Gold

$1,300, up $8

Silver

$20.43, up $0.19

Platinum

$1,413, up $14

Palladium

$730, up $6

Source: Kitco. As of 3 p.m. EST.

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

What's moving gold today?
A combination of factors helped support gold and other precious metals today. On the economic front, weak retail sales figures provided yet another piece of evidence of a possible slowdown in the U.S., although as we've seen in reports on other data, weather-related issues could turn out to have just a one-time impact rather than a lasting effect on economic growth. In addition, gold traders tend to follow technical trends to a greater extent than many stock market investors, and the psychological appeal of the round $1,300 number likely drew the market like a magnet to seek gains.

But earnings reports from Barrick and Goldcorp also gave vital information about the prospects for the gold market and the mining industry. Barrick soared 6% after delivering results that reflected the huge drop in gold last year, posting a net loss of $2.83 billion for the fourth quarter due almost entirely to impairment charges. About $900 million of those charges were related to the suspension of activity at its Pascua-Lama project on the border between Argentina and Chile, but a substantial portion came from other mines based on changes to mine-life estimates or plans for production. Yet Barrick pointed to several successful initiatives, including efforts to keep lower all-in sustaining costs than its self-defined peer group, a strengthened balance sheet, and strategic moves to sell off noncore assets and focus on its highest-potential properties. By cutting its all-in sustaining costs by 14% from year-ago levels, Barrick has set the stage for better profitability even if gold prices stop rising.

Goldcorp climbed 3.3% even as the company missed estimates for earnings and revenue, as investors seemed to focus instead on record production figures and the company's future. Like Barrick, Goldcorp had sizable impairment charges and other one-time items, producing a net loss of $1.1 billion for the fourth quarter. Yet Goldcorp has also made a lot of progress on the cost front, and optimistic investors see the company as a fair way to try to capitalize on a possible rebound in the yellow metal.

A renewed bull market in gold is far from a certainty, and plenty of factors -- including earnings reports from other miners -- could reverse today's trend. For now, though, gold investors are riding the wave of momentum higher, and it'll be interesting to see how much further it could go.

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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 13, 2014, at 6:22 PM, DukeMontrose wrote:

    Can we please have a discussion about the prospects of China backing its own currency with gold, that is going on the gold standard?

    Backed by huge stockpiles of gold + silver.

    Almost unnoticed + rather unreported China's own currency replaced the euro as the #2 reserve currency in the world recently.

    This fool believes the Chinese are well aware a victory over the dollar is likely to create waves globally. But by backing its own currency with precious metals it could/shall/may believe it could immunize China from the effects any global upheaval that may follow.

    Wishing all fools good investing.

  • Report this Comment On February 14, 2014, at 8:29 AM, TigerPack1 wrote:

    Excellent point, Duke. I have always felt the quickest and easiest way for China to leapfrog America's global political dominance and wealth is to crash the Dollar buy cornering the gold market and then dumping their Treasury holdings of nearly $2 trillion now. At this stage, they have almost completely bought up the physical supply of gold on the planet that is available, and all they need do is send an email memo to Yellen and Obama that they would like to exchange their Treasury stake. Scary!

    Friday morning pre-market sees the Dollar tanking again and commodities across the board streaking higher in Dollar prices. This may be the financial story of 2014 asserting itself.

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