Why Coeur Mining Stock Rocketed to a 15% Gain in January

January was an up-and-down month for Coeur Mining, but it ended with a real bang.

Reuben Gregg Brewer
Reuben Gregg Brewer
Feb 5, 2019 at 10:51AM
Energy, Materials, and Utilities

What happened

The shares of silver and gold miner Coeur Mining (NYSE:CDE) rose 15% in January, according to data provided by S&P Global Market Intelligence. It was not, however, a smooth ride for investors. The stock started the month on the upswing, heading higher by around 15% in the first few days of the year. Then, after the company reported production and sales results on Jan. 14, the stock nosedived, giving back all of its gains and more. And then, almost as suddenly, the stock picked up again in the last week or so of January to finish with a 15% monthly gain.

So what

The big picture here is commodity prices. Although historically a silver miner, Coeur has increasingly been expanding into the gold space. In fact, at this point, the yellow metal appears to have a larger impact on the company's financial results. That was a net negative in 2018, with spot prices for the metal falling each quarter from $1,329 per ounce in the first quarter to $1,226 in the fourth. Silver followed the same path, with first quarter 2018 spot prices of $16.77 per ounce falling to just $14.54 by the final quarter of the year.

Check out the latest Coeur earnings call transcript.

A prospector in a river panning for gold.

Image source: Getty Images.

It shouldn't be surprising to hear that 2018 was a rough year for Coeur's stock, which was down 40% in that 12-month span. But off of that low base, the stock started 2019 on a high note, as investors shifted from a risk-off mentality to a risk-on mindset as the new year got underway. Gold prices rose modestly. However, when Coeur reported production results in mid-January, investors weren't overly pleased with the news that the company was a little shy of its production guidance for the year. A gold price decline at around the same time as that news release, meanwhile, sealed the mid-month decline.

But almost as quickly as the decline started, gold prices shifted gears again and began to head sharply higher through the end of the month. Coeur's stock followed along for the ride, with investors focusing more on current gold prices than on the company's production numbers.

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Now what

The company won't report earnings until Feb. 21, but based on 2018 production and spot prices, the news isn't likely to be great. That, however, is the past, and investors are obviously trading around commodity prices today when they invest in Coeur stock. But at this point, it's probably best for investors not to get too caught up in the swift commodity-driven price advance. Unless you have a very strong feeling about the direction of precious metals prices, it's likely better to wait and see what management has to say about 2018 earnings and the company's future when it reports financial results later in the month.