Although we don't believe in timing the market or panicking over daily movements, we do like to keep an eye on market changes -- just in case they're material to our investing thesis.
After a terrible 2013, gold investors were pleased to see their fortunes reverse on the first trading day of 2014, as precious metals all soared even as the stock market fell nearly 1% to start the New Year. Spot gold prices rose $17.50, to $1,223 per ounce, with the SPDR Gold Shares (NYSEMKT:GLD) following suit with a 1.6% gain. Silver was the big gainer, with spot prices climbing back above the $20 per ounce level in an advance that pushed the iShares Silver Trust (NYSEMKT:SLV) up by almost 3%. Platinum and palladium also posted gains of about 2%.
Commentators didn't seem to take much confidence from today's gains, though. The U.S. Mint reported big gains in demand for bullion coins in 2013, with gold coin sales volumes rising 24%, to 1.096 million ounces, while silver-coin sales picked up 26%, to 42.675 million ounces. Yet, some analysts pointed to the fact that two key commodities indexes raised their allocations to gold and silver this year, forcing index-tracking investors to follow suit, and therefore contributing to today's gains. Still, longer-term investors appear to believe that the Fed's withdrawal from quantitative easing will hurt stocks, driving safe-haven-seeking investors back into precious metals.
As you'd expect, mining stocks showed even greater gains on signs of strength in the underlying metals. The Market Vectors Gold Miners Index (NYSEMKT:GDX) climbed more than 4%, with most major gold producers seeing similar gains. Among silver stocks, Silver Wheaton (NYSE:SLW) was one of the best performers among major players, with the silver-streaming giant rising more than 5%. Silver Wheaton could benefit the most from a rebound in silver prices, as it stands to win twice: once when it realizes more profit from the sale of its silver streams, and a second time if its partners boost their silver production in response to healthier pricing.
Obviously, one day's results don't go very far toward undoing the huge damage that gold and silver investors suffered in 2013. If the precious-metals markets really are setting the stage for a reversal, you'll want to see strong gains even when the stock market rises. Otherwise, today's jump could prove a short-lived respite for beaten-down investors.