Track the companies that matter to you. It's FREE! Click one of these fan favorites to get started: Apple; Google; Ford.



Fool's Gold Report: Plunging Stocks Send Metals Higher; Goldcorp Fights Back Against Yamana

Thursday looked early on as if it would be a strong day for gold and other precious metals. But as the stock market went through a broad-based major sell-off during the afternoon, gold started giving up some of its gains. At the close, the SPDR Gold Shares (NYSEMKT: GLD  ) finished up about half a percent on the day, but Market Vectors Gold Miners (NYSEMKT: GDX  ) fell almost 2%, and gold mining stocks Goldcorp (NYSE: GG  ) and Yamana Gold (NYSE: AUY  ) fell 4% and 2%, respectively, as their drama over Osisko Gold continued.

How metals moved today
June gold futures settled up $14.60 per ounce, to $1,320.50, outpacing the gain in SPDR Gold Shares, which reflected a pullback after futures settled for the day. May silver futures regained their lost ground from yesterday, closing up $0.32 per ounce, to $20.09.


Today's Spot Price and Change From Previous Day


$1,318, up $6


$20.03, up $0.19


$1,449, up $12


$788, up $8

Source: Kitco. As of 4:30 p.m. EDT.

On a day on which the Dow dropped 267 points, the relatively tepid behavior in the gold market shows how investors no longer treat gold as a rock-solid safe haven in times of trouble. Indeed, gold's decline as the market's plunge got worse suggests that investors are torn between treating gold as a higher-risk investment or as a flight-to-safety asset.

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

Still, several favorable factors are supporting gold prices. Ukraine remains a possible powder keg, as reports of further demonstrations among ethnic Russians in eastern Ukraine open the possibility that Russia could make additional incursion into Ukrainian territory. In addition, the dollar fell against the euro and the Japanese yen today, making gold cheaper for investors in those respective areas. And finally, international economic data continues to point to possible struggles ahead, with Chinese foreign trade data showing drops in both imports and exports.

The battle for Osisko continues
The gains in bullion didn't translate into the mining arena, though, as the risk of holding stocks outweighed minimal price gains for gold. Market Vectors Gold Miners was fairly representative of the gold miners on the whole, although Goldcorp fell more than most of its fellow majors.

The big news on the mergers and acquisitions front was that Goldcorp boosted its hostile bid for Osisko, offering cash and shares valued at C$7.65 to make a possible deal worth about $3.3 billion. The move comes after Osisko's CEO had predicted that Goldcorp would not raise its bid, instead surrendering to Yamana Gold's agreement to buy 50% of Osisko's assets earlier this month.

It's clear that Osisko would prefer the Yamana deal, as it would allow Osisko to pay out cash to shareholders while still maintaining control of its Canadian Malartic mine. Goldcorp's bid puts a slightly higher value on Osisko than Yamana's offer implies, but the real issue depends on whether Osisko shareholders want to transfer control to Goldcorp, or keep the company's assets in Osisko's management's hands. The burden now falls on Yamana Gold to come up with a potentially higher bid, or to rely on shareholders to choose its proposal on its own terms.

For gold-mining stocks, M&A activity like this is a net positive for smaller companies. But it also reveals the challenges big companies like Goldcorp and Yamana Gold face in finding promising assets. No matter what happens with gold prices, keep your eyes on the mining industry to see if other companies start making acquisition bids of their own.

Three stock picks to ride America's energy bonanza
Record oil and natural gas production is revolutionizing the United States' energy position. Finding the right plays, while historic amounts of capital expenditures are flooding the industry, will pad your investment nest egg. For this reason, the Motley Fool is offering a look at three energy companies using a small IRS "loophole" to help line investor pockets. Learn this strategy, and the energy companies taking advantage, in our special report, "The IRS Is Daring You To Make This Energy Investment." Don't miss out on this timely opportunity; click here to access your report -- it's absolutely free. 

Read/Post Comments (2) | Recommend This Article (3)

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 April 10, 2014, at 7:27 PM, Kenfro wrote:

    "…gold's decline as the market's plunge got worse suggests that investors are torn between treating gold as a higher-risk investment or as a flight-to-safety asset."

    I see gold is up on the day, not "plunging." You are conflating the performance of gold companies with gold itself.

    Gold companies are companies and as companies subject to the whims of the market, I've often seen them move inversely to physical gold.

  • Report this Comment On April 11, 2014, at 9:54 AM, TigerPack1 wrote:

    OK, I have written down many of my views and reasons to own gold now, including empirical and anecdotal evidence on how CPI is under-reported in a Seeking Alpha blog here...

    It includes plenty of proprietary data points and logic you will not find anywhere else. ALL - Please pass along links to the story to your friends and family, if you like it! They will thank you.

Add your comment.

Sponsored Links

Leaked: Apple's Next Smart Device
(Warning, it may shock you)
The secret is out... experts are predicting 458 million of these types of devices will be sold per year. 1 hyper-growth company stands to rake in maximum profit - and it's NOT Apple. Show me Apple's new smart gizmo!

DocumentId: 2911215, ~/Articles/ArticleHandler.aspx, 9/3/2015 8:53:01 AM

Report This Comment

Use this area to report a comment that you believe is in violation of the community guidelines. Our team will review the entry and take any appropriate action.

Sending report...

Dan Caplinger

Dan Caplinger has been a contract writer for the Motley Fool since 2006. As the Fool's Director of Investment Planning, Dan oversees much of the personal-finance and investment-planning content published daily on With a background as an estate-planning attorney and independent financial consultant, Dan's articles are based on more than 20 years of experience from all angles of the financial world.

Today's Market

updated 11 hours ago Sponsored by:
DOW 16,351.38 293.03 0.00%
S&P 500 1,948.86 35.01 0.00%
NASD 4,749.98 0.00 0.00%

Create My Watchlist

Go to My Watchlist

You don't seem to be following any stocks yet!

Better investing starts with a watchlist. Now you can create a personalized watchlist and get immediate access to the personalized information you need to make successful investing decisions.

Data delayed up to 5 minutes

Related Tickers

9/2/2015 4:02 PM
AUY $1.73 Down +0.00 +0.00%
Yamana Gold, Inc.… CAPS Rating: ***
GDX $13.63 Down +0.00 +0.00%
Market Vectors Gol… CAPS Rating: ***
GG $13.76 Down +0.00 +0.00%
Goldcorp, Inc. (US… CAPS Rating: ***
GLD $108.62 Down +0.00 +0.00%
SPDR Gold Trust (E… CAPS Rating: **