On Tuesday, precious metals extended their pullback from yesterday, as gold traders continued to unwind short-term bullish positions based on the possibility for unrest in Ukraine following the Crimean referendum to reunite with Russia. As geopolitics have apparently reached a new equilibrium, investors are now looking at the meeting of the Federal Open Market Committee today and tomorrow, with Wednesday's press conference potentially holding clues to Fed Chair Janet Yellen's plans for handling monetary policy in the coming years. With the likelihood of further Fed tapering, April gold futures dropped $14 per ounce to settle at $1,359, while May silver dropped $0.41 per ounce to $20.86. SPDR Gold Shares (GLD -0.20%) fell three-quarters of a percent while iShares Silver (SLV 0.45%) dropped 1.6%, and in the mining front, the Market Vectors Gold Miners ETF (GDX -0.03%) weighed in with a 1.4% decline. Platinum and palladium were down as well in Tuesday's trading.

Metal

Today's Spot Price and Change From Previous Day

Gold

$1,356, down $12

Silver

$20.84, down $0.36

Platinum

$1,454, down $5

Palladium

$765, down $5

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

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

The surprising moves in silver miners Tuesday
With silver bullion down around 2%, it would have been natural for silver-mining companies to follow suit. Yet several silver miner stocks were actually up strongly, with Coeur Mining (CDE -9.46%) climbing almost 5% and Pan American Silver (PAAS 0.70%) gaining more than 2%. What explains the disparity?

Silver plays an interesting role among the precious metals, as it is an extremely popular holding for smaller precious-metals investors and also has extensive uses in jewelry as well as industrial processes. That stands in contrast to platinum-group metals, which are used in catalytic converters for pollution control, and to gold, which is a common jewelry item but has fewer industrial applications. As a result of its hybrid status, silver gives investors exposure both to industrial demand and to ordinary precious-metals dynamics.

One thing that jewelry retailers have noticed during the huge bull market in precious metals during the 2000s and early 2010s is that as prices rise, it's harder to maintain margin levels on expensive jewelry without sacrificing sales volume. As gold and platinum jewelry become prohibitively pricey, silver has played a key role for the jewelry industry, according to the latest figures from the Silver Institute. A report on buying trends in the silver jewelry industry found that nearly three-quarters of retailers saw increased sales of silver, with average increases of about 17% in 2013. Moreover, two-thirds of retailers saw rising sales during the 2013 holiday season, and more than nine out of 10 believe that the trend toward silver will last for years to come.

Shareholders in Pan American Silver and Coeur Mining apparently believe that today's drop in bullion prices isn't enough to reverse what has been a solid beginning of the year for the white metal in 2014. With the potential to rise either if a strong economy bolsters use of silver for industrial purposes or if a weak economy leads to more safe-haven buying of precious metals, silver has attractive features for any future market -- and that could be pushing those select silver miners ahead.