Fool’s Gold Report: Gold Keeps Climbing on the Dow’s Holiday

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.

For investors following the Dow Jones Industrials (DJINDICES: ^DJI  ) , Monday was a well-deserved day off after a strong week of gains last week. But the gold market is global, and even though live futures trading wasn't available in the U.S., foreign markets were open, and electronic trading on U.S. exchanges was also available. By the usual end of live futures trading this afternoon, April gold futures had continued to climb sharply, rising more than $10 per ounce to $1,329. Silver also posted solid gains of almost $0.40 per ounce to $21.82. That should give bullion ETFs SPDR Gold Shares and iShares Silver Trust a head-start when they open tomorrow, as their share prices will have to reflect not only tomorrow's changes in bullion prices but also today's.

In the absence of U.S. stock market activity to influence the precious-metals market, most analysts instead looked at weakness in the U.S. dollar against the Euro and rising prices in the oil market as catalysts to send gold and silver higher. Usually -- though definitely not without exception -- strength in gold has coincided with a falling dollar and rises in other key commodities. Meanwhile, for the platinum and palladium markets, an extended period of labor strife in the key South African market has led to rising prices for platinum-group metals as well, with platinum up another $2 Monday to $1,425 per ounce while palladium gained $4 to $739 per ounce.

With Canadian stock markets also closed today for the nation's Family Day holiday, investors didn't get an advance glimpse of how mining stocks will react tomorrow. But this week will be a key week for earnings among gold and silver stocks. Newmont Mining (NYSE: NEM  ) reports earnings on Thursday, with investors expecting a drop of about 60% in net income on 15% lower revenue from year-ago levels. Until we get through the first quarter of 2014, comparisons will keep looking ugly given the big drop in gold and silver prices in April 2013.

The silver-mining side of the industry is where the most earnings action will be this week, as Coeur Mining (NYSE: CDE  ) and Hecla Mining (NYSE: HL  ) report on Wednesday, followed by Pan American Silver (NASDAQ: PAAS  ) on Thursday. Investors expect to see Coeur fall to a loss from a year-ago gain in the year-ago quarter, with revenue down 8.5%. Hecla should be more fortunate, breaking even on a 50% gain in sales stemming largely from the fact that its Lucky Friday mine only reopened in February 2013. Even Pan American, which alone of the three is expected to stay profitable, could see earnings fall by 80% from year-ago levels on a worse than 20% drop in sales.

Yet in all three instances, investors appear to be looking forward rather than back, hoping that the recent rebound in silver prices will keep their stocks on the rise. Investors will have to look closely to make sure that companies are doing their best to control costs while they wait for a rebound in silver.

With the stock market closed, Monday was a good chance to get updated on the state of other, less-followed markets. At least so far in 2014, gold and other precious metals have been very impressive. After such a terrible 2013, gold investors hope that the current rebound will continue well into the future.

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  • Report this Comment On February 18, 2014, at 11:18 AM, TigerPack1 wrote:

    Commodities as a group undergoing major SPIKE HIGHER Tuesday. Agriculture indexes are +8% the last five weeks to 9-month HIGH today. Energy/oil up strongly. Metals up but are lagging bigger spikes happening elsewhere. INFLATION on the rise, day after day. Is anybody else watching or reporting this real world leap in costs and expenses for businesses and consumers?

  • Report this Comment On February 18, 2014, at 1:24 PM, TigerPack1 wrote:

    New highs across the board in commodities this afternoon, broad indexes approaching +2% on day. That's a good MONTHLY gain TODAY!

    If food prices continue at percentage gain clip the last 5-6 weeks, you are talking +150% annualized!

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