Please ensure Javascript is enabled for purposes of website accessibility

Why Coeur Mining Stock Rallied Roughly 10% in Early Trading Today

By Reuben Gregg Brewer - May 3, 2021 at 2:57PM

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

Gold and silver miner Coeur Mining's stock advance was likely more to do with the metals than the company.

What happened

Shares of gold and silver miner Coeur Mining (CDE 0.99%) rose just about 10% on May 3. However, by roughly 2 p.m. EDT the stock had given back some of its gains and was sitting with an advance of about 8%. There wasn't any material news out of the company today, which likely means that the driver of the gain was a bit more basic.

So what

Coeur is, as its name implies, a miner, which means that its top and bottom lines are driven by the products it brings up from the ground. In the first quarter, roughly 68% of the company's top line was tied to gold, with the remainder driven by silver. It's common for precious metals miners to produce more than one metal, as gold and silver (and other metals, like copper) are often found in the same location. However, Coeur's exposure to silver (roughly 32% of sales) is fairly material for a precious metals miner, and that likely played a big part in today's gain.  

A gloved hand holding a silver bar weighing 100 ounces.

Image source: Getty Images.

To put some numbers on that, gold prices were up around 1.4% at 2 p.m. EDT, which is a notable move. However, silver is often a lot more volatile, and that was the case today, with the precious/industrial metal higher by 4.3% -- a move that was roughly three times the size of gold's advance. Thus, Coeur, with notable exposure to the metal, also saw a notable price move relative to miners with less silver in the mix. This is what you would expect and is actually a pretty important issue to keep in mind with Coeur. Indeed, the stock can exhibit elevated volatility that might come as a surprise if you didn't know about the notable silver component here.

Now what

Generally speaking, a precious metals miner like Coeur isn't the type of stock that long-term investors should be buying because of one day's move, up or down. It is a far better idea to look at gold and silver miners as diversification instruments, which completely changes how you should consider them within your portfolio. 

Invest Smarter with The Motley Fool

Join Over 1 Million Premium Members Receiving…

  • New Stock Picks Each Month
  • Detailed Analysis of Companies
  • Model Portfolios
  • Live Streaming During Market Hours
  • And Much More
Get Started Now

Stocks Mentioned

Coeur Mining, Inc. Stock Quote
Coeur Mining, Inc.
$3.07 (0.99%) $0.03

*Average returns of all recommendations since inception. Cost basis and return based on previous market day close.

Related Articles

Motley Fool Returns

Motley Fool Stock Advisor

Market-beating stocks from our award-winning analyst team.

Stock Advisor Returns
S&P 500 Returns

Calculated by average return of all stock recommendations since inception of the Stock Advisor service in February of 2002. Returns as of 07/01/2022.

Discounted offers are only available to new members. Stock Advisor list price is $199 per year.

Premium Investing Services

Invest better with The Motley Fool. Get stock recommendations, portfolio guidance, and more from The Motley Fool's premium services.