Thursday looked early on as if it would be a strong day for gold and other precious metals. But as the stock market went through a broad-based major sell-off during the afternoon, gold started giving up some of its gains. At the close, the SPDR Gold Shares (NYSEMKT:GLD) finished up about half a percent on the day, but Market Vectors Gold Miners (NYSEMKT:GDX) fell almost 2%, and gold mining stocks Goldcorp (NYSE:GG) and Yamana Gold (NYSE:AUY) fell 4% and 2%, respectively, as their drama over Osisko Gold continued.

How metals moved today
June gold futures settled up $14.60 per ounce, to $1,320.50, outpacing the gain in SPDR Gold Shares, which reflected a pullback after futures settled for the day. May silver futures regained their lost ground from yesterday, closing up $0.32 per ounce, to $20.09.


Today's Spot Price and Change From Previous Day


$1,318, up $6


$20.03, up $0.19


$1,449, up $12


$788, up $8

Source: Kitco. As of 4:30 p.m. EDT.

On a day on which the Dow dropped 267 points, the relatively tepid behavior in the gold market shows how investors no longer treat gold as a rock-solid safe haven in times of trouble. Indeed, gold's decline as the market's plunge got worse suggests that investors are torn between treating gold as a higher-risk investment or as a flight-to-safety asset.

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

Still, several favorable factors are supporting gold prices. Ukraine remains a possible powder keg, as reports of further demonstrations among ethnic Russians in eastern Ukraine open the possibility that Russia could make additional incursion into Ukrainian territory. In addition, the dollar fell against the euro and the Japanese yen today, making gold cheaper for investors in those respective areas. And finally, international economic data continues to point to possible struggles ahead, with Chinese foreign trade data showing drops in both imports and exports.

The battle for Osisko continues
The gains in bullion didn't translate into the mining arena, though, as the risk of holding stocks outweighed minimal price gains for gold. Market Vectors Gold Miners was fairly representative of the gold miners on the whole, although Goldcorp fell more than most of its fellow majors.

The big news on the mergers and acquisitions front was that Goldcorp boosted its hostile bid for Osisko, offering cash and shares valued at C$7.65 to make a possible deal worth about $3.3 billion. The move comes after Osisko's CEO had predicted that Goldcorp would not raise its bid, instead surrendering to Yamana Gold's agreement to buy 50% of Osisko's assets earlier this month.

It's clear that Osisko would prefer the Yamana deal, as it would allow Osisko to pay out cash to shareholders while still maintaining control of its Canadian Malartic mine. Goldcorp's bid puts a slightly higher value on Osisko than Yamana's offer implies, but the real issue depends on whether Osisko shareholders want to transfer control to Goldcorp, or keep the company's assets in Osisko's management's hands. The burden now falls on Yamana Gold to come up with a potentially higher bid, or to rely on shareholders to choose its proposal on its own terms.

For gold-mining stocks, M&A activity like this is a net positive for smaller companies. But it also reveals the challenges big companies like Goldcorp and Yamana Gold face in finding promising assets. No matter what happens with gold prices, keep your eyes on the mining industry to see if other companies start making acquisition bids of their own.