Hecla Mining (HL 2.69%) stock declined 2.5% through 11:35 a.m. ET Monday on sliding gold prices -- but rising silver prices.
War continues to rage in the Middle East, driving investors to buy gold and silver as safe havens. A couple macroeconomic trends are interfering with this instinct, however, and this has been bad news for Hecla stock recently.
Image source: Getty Images.
Silver and gold prices
Hecla mainly mines silver. Silver closed at $93.73 per ounce at the end of February, according to data from TradingEconomics.com. It then moved higher, topping $96.10 a week ago. Silver then slid, but today it's bouncing 0.6% to $84.81 per ounce -- which should be good news for Hecla.
Gold is the problem, and Hecla also mines gold. Gold closed February around $5,278 per ounce. Prices spiked when U.S. and Israeli forces began bombing Iran, rising as high as $5,416 last Monday before falling back. At last report, gold was trading at $5,095 per ounce, down 1.2% from Friday's close.
Silver is still down 12% from its recent high, though, versus gold down only 6%. Silver thus has more room for improvement.
NYSE: HL
Key Data Points
Two big things affect precious metal prices
More broadly, the U.S. dollar index, which compares the dollar's value to a basket of international currencies, is up about 1.7% since the war began. A stronger dollar means you need fewer dollars to buy an ounce of silver. Thus, when the dollar rises, the price of silver (in dollar terms) falls.
Interest rates can also affect silver prices. When interest rates rise, investors face the choice between owning silver, which doesn't pay interest, and owning bonds, which do. Investors may sell silver to buy bonds, and when this happens -- again -- the price of silver drops.
That's why Hecla stock is down today.
