Fool's Gold Report: Gold, Platinum Again Diverge; Barrick Sells Part of African Stake

On Tuesday, the precious-metals markets were divided for the second day in a row, with gold posting solid gains while platinum and palladium fell significantly. Without much in the way of major economic news, gold traders have started to look forward to next week's meeting of the Federal Open Market Committee, with the expectation that tapering of bond-buying activity will continue at its $10 billion per meeting pace. Moreover, with a key vote expected this weekend regarding whether the Crimean region will seek to secede from Ukraine, gold has regained some of its safe-haven status. April gold futures climbed $5.20 per ounce to settle at $1,346.70, even as May silver dropped almost a dime to settle at $20.815 per ounce. Bullion ETFs SPDR Gold Shares (GLD 0.09%) and iShares Silver Trust (SLV 3.26%) both notched small gains, but platinum-group metals were down substantially.

Source: Kitco. As of 3:30 p.m. ET.

Are platinum and palladium just pausing?
Platinum-group metals might be down today, but they've drawn a substantial amount of attention in recent days as they've posted substantial gains of their own so far in 2014. According to ETF Securities, exchange-traded products that focus on platinum and palladium bullion had their largest inflows of investor cash since last June. Traders justify their moves by pointing to the twin catalysts of ongoing strikes among miners in South Africa that have been going on for more than six weeks and the possibility of economic sanctions against Russia locking off more than 40% of the world's palladium supply.

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

Gold also owes some of its gains to the Ukrainian situation, as Russia also has extensive gold reserves. But if sanctions were to occur, their impact on gold would be more psychological than fundamental, given the much-more-liquid gold market compared to the less plentiful supplies of platinum-group metals available in the market. Anticipating that possibility, SPDR Gold Trust saw its biggest inflows in nearly a month on Monday, and in general, investors seem more willing to consider precious metals as an investment option than they did in 2013.

Barrick tops mining headlines
Meanwhile, trading in mining stocks was relatively muted, with gold miners generally rising and silver miners falling in line with their respective metals. Barrick Gold (ABX 3.19%) climbed half a percent after announcing yesterday that it would sell off a 10% stake in its African Barrick Gold unit. The sale of 41 million shares should raise roughly $200 million, and even after the sale, Barrick will still control a majority stake in the African unit -- even though it has longer-term plans to eliminate its holdings in the division entirely.

The move is just the latest in a series of similar asset sales as well as acquisitions throughout the industry, as mining companies try to optimize their asset holdings for the current price environment. As painful as current price levels are, they represent huge opportunities, and smart companies are taking advantage of them. Goldcorp's (GG +0.00%) ongoing attempts to buy Osisko Mining show Goldcorp's strategy of trying to acquire promising long-term assets cheaply. Similarly, Silver Wheaton (SLW 2.50%) has the potential to make much more lucrative financing deals with gold and silver miners now than they did at the market peak, as prospective partners are much more willing to offer attractive terms.

You can expect those trends among miners to continue at least until prices rebound more sharply. Before that happens, many companies will be fighting for their financial lives, and investors who figure out which ones can take advantage of their more vulnerable peers will profit.