Please ensure Javascript is enabled for purposes of website accessibility

Fool's Gold Report: Metals Soar as Gold Climbs to Highest Levels in 2014

By Dan Caplinger – Jan 17, 2014 at 6:40PM

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

A falling stock market helped lift precious metals higher, with platinum once again leading the way higher. Find out why bullion climbed today.

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.

Gold prices jumped to their best levels in 2014 today, as a poor reading from the University of Michigan's Consumer Sentiment Index led to some uncertainty about whether the Federal Reserve will taper its bond-buying activity as quickly as some fear. Spot gold prices jumped $11 per ounce, to $1,254, sending the SPDR Gold Trust (GLD 0.09%) to gains of nearly 1%. Silver rose $0.23 per ounce, to $20.33, with iShares Silver (SLV -0.45%) rising 0.8% on the session. Platinum led the way higher today with a $22 rise, to $1,451, while palladium picked up $6 per ounce, to $747.

One factor that always plays a role in the platinum market is the state of the labor market in South Africa, which has some of the world's biggest platinum producers. With reports of a strike vote against Impala Platinum and Lonmin in South Africa, a temporary drop in platinum production could support prices in the near term. If workers at Anglo American follow suit, it could hurt the three top producers, and bring more than half of the world's platinum output to a standstill.

Image sources: Wikimedia Commons; Creative Commons/Armin Kubelbeck.

Also helping to bolster the market were positive calls from Morgan Stanley in the metals markets. The analyst sees palladium and copper performing best, but it made a full-year gold forecast of $1,313 per ounce, with platinum coming in at $1,639, and silver at $21. Supply conditions in the platinum-group metals make the area more attractive than gold, given the negative impact that Fed tapering will likely have on gold demand.

Mining stocks performed well, with the Market Vectors Gold Miners ETF (GDX -0.94%) climbing 3%. Smaller miners posted even sharper gains, with AuRico Gold (NYSE: AUQ) gaining more than 7% on the general strength in the market. The company's preliminary operational results announced earlier this week included operational results that just hit the lower end of its production guidance, although cash costs at $676 for the full 2013 year came in above guidance of $565 to $645 per ounce, due largely to much higher-than-expected costs at its Young-Davidson mine. Still, AuRico has room to run higher if gold prices can maintain their higher levels from here.

Even somewhat disappointing news got positive results. Coeur Mining (CDE -0.29%) said that silver production actually dropped 6% for the full 2013 year, with production levels at 17 million ounces. Yet, gold production hit a record of just over 262,000 ounces, rising 16%. Coeur gave production guidance that points to modest growth in silver production at the expense of roughly 10% to 15% reduction in gold production levels. Favorable cost projections could help the company be more profitable in the future, even as Coeur tries to emphasize higher-margin operations over simply maximizing output volume.

Investors can take heart from the recent gains in gold, which have defied expectations that 2014 would continue to be a weak year for precious metals. Still, gold could face plenty of headwinds throughout the remainder of the year, making 2014 a challenging year for those trying to pick a direction for the gold market.

Fool contributor Dan Caplinger has no position in any stocks mentioned. You can follow him on Twitter @DanCaplinger. The Motley Fool has no position in any of the stocks mentioned. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

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

iShares Silver Trust Stock Quote
iShares Silver Trust
SLV
$19.72 (-0.45%) $0.09
SPDR Gold Trust Stock Quote
SPDR Gold Trust
GLD
$163.22 (0.09%) $0.14
Coeur Mining Stock Quote
Coeur Mining
CDE
$3.40 (-0.29%) $0.01
Market Vectors Gold Miners ETF Stock Quote
Market Vectors Gold Miners ETF
GDX
$28.44 (-0.94%) $0.27

*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
356%
 
S&P 500 Returns
118%

Calculated by average return of all stock recommendations since inception of the Stock Advisor service in February of 2002. Returns as of 11/26/2022.

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.