Why Agnico Eagle Mines Stock Dropped Today
Key Points
Both silver and gold sold off this morning, with silver losing about twice as much value as gold.
Silver prices hit an all-time high last night.
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Agnico Eagle Mines (NYSE: AEM) stock tumbled 5.7% through 11:30 a.m. ET Monday on a big reversal of the precious metals trade.
As CNBC reports, silver hit an all-time high price north of $80 an ounce last night, but dropped dramatically this morning as traders took profits, falling as low as $70.25 per ounce. At last report, silver prices were still down approximately 7.9% at $71.12 per ounce, and gold prices were down 4.5% at $4,349.30.
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What's ailing silver and gold today?
2025 has been tremendous for investors in silver and gold alike. Silver started the year near $20 an ounce, but more than tripled through last night. (Gold prices are up 65%.) For commodity metals that derive their value mostly from investors seeking to use them as hedges against inflation -- unlike stock in a business, which generates value by producing goods and services over time -- these are enticing gains.
The kind of gains that can convince investors to sell and lock in profits.
This appears to be what's happening today. Adding to the dynamic, pundits are suggesting that what began as a mild bout of profit-taking may be building into a "flash crash" as investors, who bought silver and gold on margin, begin facing margin calls, thereby increasing the selling pressure.
Is Agnico Eagle stock a sell?
So is it time to panic?
Not necessarily. While priced north of 26 times GAAP earnings, Agnico Eagle looks cheaper when valued on free cash flow -- about 25x. Analysts who follow the stock anticipate Agnico will grow earnings nearly 37% per year over the next five years, too, which makes the high price palatable. And Agnico does pay a modest 1% dividend yield.
All things considered, I think the stock should be safe.
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Rich Smith has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.
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