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Gold and Silver Lost Their Shine Today

By Travis Hoium - Apr 15, 2013 at 4:00PM

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Is this meaningful or just another movement?

Although we don't believe in timing the market or panicking over market movements, we do like to keep an eye on big changes -- just in case they're material to our investing thesis.

What: Gold and silver miners are taking it on the chin today. Royal Gold (RGLD 3.22%) fell as much as 10.4%, Allied Nevada Gold (NYSEMKT: ANV) fell up to 11.5%, and Silver Wheaton (WPM 5.42%) dropped as much as 11.2%.

So what: Gold continued its free fall today, falling 9.2% as I'm writing, and silver has been even worse, down 11.6%. Slower than expected GDP growth of 7.7% during the first quarter in China has everything from gold to oil moving lower today.

Now what: Commodities can be extremely volatile but gold can be hit especially hard because there's little industrial use for the commodity. The rapid rise of gold during the recession was driven by fear and now the drivers and traders buying the commodity are starting to subside. It's days like today that keep me out of the commodities market because there's little warning of problems and the moves can be extreme. I'm surprised miners haven't moved even lower because their financial results should be levered to the commodities they're producing.

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Stocks Mentioned

Wheaton Precious Metals Corp. Stock Quote
Wheaton Precious Metals Corp.
WPM
$41.44 (5.42%) $2.13
Royal Gold, Inc. Stock Quote
Royal Gold, Inc.
RGLD
$115.92 (3.22%) $3.62

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

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