Shares of precious metals miner Coeur Mining (CDE 3.61%) fell as much as 11.5% this week according to data from S&P Global Market Intelligence. By the open of trading on Friday, Jan. 28, the stock was still off by a touch over 11%. Both silver and gold have been weak the last couple of days, so the declines make sense.
On Jan. 27, silver fell more than 4%. Gold was off around half that much, which is fairly normal because silver tends to be more volatile. While that was a particularly bad day for both metals, silver has been in a downtrend since Jan. 20. Gold has really fallen only in the last two days. The ups and downs in precious metals right now are being heavily driven by economic news, including the U.S. Federal Reserve's plan to raise interest rates. These metals are often viewed as safe haven investments, and investors have a habit of jumping in and out of them and the miners that produce them rather quickly and dramatically.
Given that there was no particular news out of the company, the shares of Coeur, which mines for both silver and gold, are likely just moving around with investor sentiment about the two metals. Exacerbating the sensitivity here is the fact that Coeur is a rather small miner, with a market cap of just $1 billion or so. That said, the company's production mix has changed greatly over the past decade, and it isn't quite as reliant on silver as it once was. To put some numbers on that, in 2010, silver was nearly 70% of its business, but that had been trimmed to around 25% by 2020. Still, that's a material number, and many investors continue to think of Coeur as a silver company. So with silver heading sharply lower, Coeur's shares went along for the ride.
Precious metals miners are generally leveraged to the price moves of silver and gold. They are often even more volatile than the commodities themselves. Investing here requires an ability to handle big daily and weekly price swings, both up and down. That said, most investors should include a miner like Coeur for the diversification benefit it offers and not as a way to time precious metals price moves. Meanwhile, more conservative types would probably be better off owning streaming and royalty companies like Royal Gold and Wheaton Precious Metals. They offer exposure to the metals, but have a slightly different business model that tends to produce relatively wide margins in good times and bad ones.