Fool's Gold Report: Precious Metals Fall as Goldcorp Surrenders Osisko to Yamana Gold, Agnico Eagle

A lack of negative pressure from stocks and other financial markets led to reduced interest in gold and other precious metals.

Dan Caplinger
Dan Caplinger
Apr 21, 2014 at 5:40PM
Markets

After a long holiday weekend, gold was unable to return to its bullish ways, as a generally upbeat attitude in the U.S. stock market and a lack of any major news on the geopolitical or macroeconomic front led to further selling for the yellow metal. Although precious metals exchange-traded funds and mining stocks were generally slightly lower Monday, news that Goldcorp (NYSE:GG) would not seek to raise its bid for Osisko Mining sent its shares up more than 2%, while competing bidders Yamana Gold (NYSE:AUY) and Agnico Eagle Mines (NYSE:AEM) both suffered substantial losses in their share prices despite their apparent victory for Osisko.


Canadian Malartic mine. Source: Osisko Mining.

Going once, going twice...
The bidding war for Canada's Osisko Mining and its Canadian Malartic mine has attracted a lot of attention lately among gold investors, as many saw Goldcorp's initial hostile bid as an opportunistic attempt to pick up a lucrative asset at a relatively attractive price. As often happens in auctions, though, Osisko was able to attract interest from other parties, and that ended up getting Osisko investors a much better deal than they would have obtained otherwise.

This afternoon, Goldcorp announced that it would not make any further changes to its offer for Osisko, essentially surrendering to the rival bid from Yamana Gold and Agnico Eagle Mines. Prior to Agnico Eagle joining the discussion, Yamana Gold' had only sought a 50% interest in Osisko's assets. When Agnico Eagle stepped in, though, theĀ joint offer with Yamana Gold involved a full takeover that represented an 11% premium to the Goldcorp offer. Although the rise in Goldcorp's shares and the drop in shares of Agnico Eagle Mines and Yamana Gold bring the two offers closer to balance, the fact that Goldcorp's bid was hostile could play a role in shareholder support for the Yamana/Agnico Eagle deal.

Bullish investors hope that the Osisko experience could bring a big rise in merger and acquisition activity. If it does, gold-mining stocks could rise industry-wide even without further gains in gold prices.

How metals moved today
June gold futures closed down $5.40 per ounce Monday, settling at $1,288.50. May silver futures suffered even greater losses on a percentage basis, falling nearly $0.25 per ounce to $19.35. Losses in the platinum-group metals were also substantial, with palladium proving to be the big loser Monday.

Metal

Today's Spot Price and Change From Previous Day

Gold

$1,290, down $5

Silver

$19.42, down $0.23

Platinum

$1,396, down $12

Palladium

$777, down $17

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

For bullish investors looking for respite from recent losses, gold's best prospects appear to be contrarian plays on the stock market. With stocks looking poised to make another run at record highs, gold could find itself under pressure until the next unexpected piece of news hits the tape.