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Fool's Gold Report: Why Metals and Miners Moved in Opposite Directions Friday

Dan Caplinger
February 21, 2014

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.

Usually, you can count on mining stocks to move in the same direction as the prices of the metals they produce. Yet today, we saw an unusual disparity between the two markets, as gold, silver, and the platinum-group metals all posted modest spot-price gains, but the Market Vectors Gold Miners ETF (NYSEMKT: GDX) fell by half a percent. Admittedly, gold's gains weren't all that strong, as even though April gold futures finished the day up about 0.5% to settle at $1,323.60 per ounce, the SPDR Gold Shares (NYSEMKT: GLD) fell modestly on the day. Similarly, minimal gains of about half a percent, to $21.815 per ounce in March silver futures, left the iShares Silver Trust (NYSEMKT: SLV) down slightly.


Today's Spot Price and Change From Yesterday


$1,326, up $3


$21.85, up $0.03


$1,424, up $10


$738, up $4

Source: Kitco. As of spot-market close.

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

The wild card for mining stocks: earnings
The big move in the mining sector came from Newmont Mining (NYSE: NEM), which fell more than 4% after releasing earnings that didn't impress investors. Like just about every other miner in the industry, Newmont suffered big declines in revenue as a result of the plunge in gold prices, and asset impairments forced the company to report a net loss of about $1.2 billion.

Yet, focusing on news that we've known since last April would come for Newmont and its peers isn't a smart way to assess a company as an investment. CEO Gary Goldberg said that the company has plenty of interesting projects in development that could add more than 1.5 million gold ounces to Newmont's production relatively quickly. That would only put a small dent in the 11% drop in reserves that Newmont reported a