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Fool's Gold Report: Crimean Calm Sends Gold, Silver Slumping; Miners Fall

By Dan Caplinger - Mar 17, 2014 at 7:11PM

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After anticipation of a more dangerous world, the reality disappointed gold investors today. Find the details here.

After five days of rising gold prices last week, investors were expecting the worst from Crimea's referendum on reunification with Russia yesterday. Although they got the anticipated vote to leave Ukraine as well as economic sanctions on Russia as a result, gold investors weren't pleased with the result on the precious-metals markets on Monday. April gold futures fell $6.10 per ounce to settle at $1,372.90, while May silver fell almost $0.14 per ounce to $21.275. SPDR Gold Shares ( GLD 0.78% ) and iShares Silver ( SLV -1.09% ) fell 1.1% and 1.4% respectively, but that paled in comparison to the more than 3% drop in the Market Vectors Gold Miners ETF ( GDX 0.99% ). Platinum and palladium were narrowly mixed in Monday's trading.

Metal

Today's Spot Price and Change From Previous Day

Gold

$1,368, down $15

Silver

$21.19, down $0.27

Platinum

$1,459, down $2

Palladium

$770, up $1

Source: Kitco. As of 5:30 p.m. EDT.

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

Why did gold fall?
Last week, investors expected that if Crimea moved aggressively to join with Russia, geopolitical fireworks would result. Yet in the aftermath of Sunday's vote, the widespread violence that many had anticipated largely failed to materialize, putting the U.S. and other nations in the somewhat awkward position of figuring out how to respond. In the end, sanctions targeting just a few dozen individuals for freezing assets and prohibiting travel visas looked fairly inconsequential, and gold investors saw the move as potentially cooling off the situation rather than escalating it.

Among miners, the mood was particularly dire. Fortuna Silver ( FSM -0.43% ) fell 14% as investors awaited year-end financial data that as of 6:45 p.m. EDT was still unavailable on the company's investor-relations site. The producer of silver and gold climbed to yearly highs Friday on gains in precious metals, but it needs continued rises in bullion prices to maximize the value of its Latin American holdings. Even among larger names, silver miners faced substantial struggles, with Hecla Mining ( HL 1.44% ) leading the way down with a loss of more than 4%.

What's next for metals
Regardless of Monday's losses, with the Crimean situation playing out in much the way that most analysts had expected, attention will soon return to macroeconomic considerations. The Fed will meet later this week to decide whether to continue pulling back on its quantitative easing activity, and with Fed chair Janet Yellen expected to give a press conference, investors will get their first look at the new central-bank leader's style in communicating with the public. Also, with U.S. consumer inflation data due tomorrow morning and with a reading in Europe having shown ongoing concerns about potential deflation, gold will have some chances to rebound later in the week.

This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium advisory service. We’re motley! Questioning an investing thesis – even one of our own – helps us all think critically about investing and make decisions that help us become smarter, happier, and richer.

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Stocks Mentioned

Hecla Mining Company Stock Quote
Hecla Mining Company
HL
$5.62 (1.44%) $0.08
iShares Silver Trust Stock Quote
iShares Silver Trust
SLV
$20.83 (-1.09%) $0.23
SPDR Gold Trust Stock Quote
SPDR Gold Trust
GLD
$166.79 (0.78%) $1.29
Fortuna Silver Mines Inc. Stock Quote
Fortuna Silver Mines Inc.
FSM
$3.46 (-0.43%) $0.01
VanEck Vectors ETF Trust - VanEck Vectors Gold Miners ETF Stock Quote
VanEck Vectors ETF Trust - VanEck Vectors Gold Miners ETF
GDX
$32.12 (0.99%) $0.32

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

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