After seeming to shrug off the conflict with Iran on Monday, U.S. investors stood up and took notice on Tuesday, pushing the major U.S. stock indices down by about 1% and driving domestic oil prices up by nearly $6 a barrel.
Normally, during times of trouble, gold and U.S. Treasuries have acted as safe havens for investors. But that wasn’t the case on Tuesday. Both gold and U.S. Treasury prices fell.
“Gold stocks and gold prices can make very counterintuitive moves. I think that it was just one of those counterintuitive moves,” said Kevin Smith, founder and CEO of Denver-based Crescat Capital, which manages a precious metals fund.
The spot price of gold fell by 4.5% a troy ounce on a day when it normally would have been expected go up. The drop appears to be an effort by investors to get “liquid” or hold cash. Treasuries were down on concerns that higher oil prices could accelerate inflation.
Denver remains a global hub for the gold mining industry. Precious metal companies were the worst-performing Colorado stocks on Tuesday, accounting for nearly three-quarters of the $18.3 billion that the state’s 55 largest public companies shed in value, according to a Denver Post analysis.
Shares of Denver-based SSR Mining, the third-largest gold producer in the U.S., fell 9.42%. Englewood-based Vista Gold Corp., which operates a gold mine in Australia, suffered a 9.25% drop in its share price.
But the biggest hit in dollars, $11 billion erased, came from the 7.9% drop in the share price of Newmont Corp., the world’s largest gold mining company.
Some of the downward pressure was company-specific. Newmont, which became Colorado’s largest public company following the departure of Palantir Technologies from Denver last month, was downgraded by TD Securities, which now rates the company a “hold.” Tuesday was also the company’s ex-dividend date, or the cutoff that determines what investors can collect a declared dividend. Shares usually fall by around the per-share amount of the dividend that is being paid.
The drop in gold prices, however, was the biggest driver, as it was for other gold-related companies.
Denver-based Royal Gold, a royalty and streaming company, saw its shares fall 7.66%. Royal Gold provides capital to mining companies. It is repaid in royalties on gold production or through rights to purchase a mine’s future metal production at a steep discount.
Solitario Resources, a Wheat Ridge company that has been pivoting away from zinc mining to focus more on gold exploration, saw its shares drop 3.4% in value.
Sandwiched in between those four mining companies was Gloo Holdings, a Boulder-based technology platform that provided investors with a fourth-quarter they apparently didn’t like on Monday afternoon. Its shares were down 8.1%.
Smith, who was attending a gold mining conference in Toronto, said the mood among industry players was upbeat. He urged investors not to give up on gold because of one day’s action.
“I believe we are still in the early phases of a major bull market for the mining industry. Last year was the first big year we had after a 15-year bear market,” he said.
Gold remains in short supply, and it can take 15 years for a new mine to get all the approvals needed to start production. He said pullbacks are normal and that he expects investors without exposure to gold to buy into any dips.
