Why Coeur Mining Stock Crashed Today
Key Points
War in the Mideast initially drove gold prices higher, but they're falling today.
Coeur is one of the more expensive gold stocks, and not priced well for falling gold.
- 10 stocks we like better than Coeur Mining ›
Coeur Mining (NYSE: CDE) stock tumbled 11.2% through 1:30 p.m. ET Tuesday. As you've probably heard, there's conflict in the Middle East. Ordinarily, investors flee to gold and silver as safe havens in troubled times. At first, that's how the story appeared to be playing out this time as well.
Problem is, gold and silver prices are tanking today, and now investors are selling this gold mining stock. (Coeur also mines silver.)
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Gold and silver prices fall
Gold prices closed February around $5,278 per ounce, according to data from TradingEconomics.com. Prices spiked after U.S. and Israeli forces began striking Iran over the weekend, rising as high as $5,416 early Monday before starting to fade.
At last report, gold was trading at $5,107 per ounce, down 3.9% from yesterday's close.
The story on silver is similar. Silver closed at $93.73 per ounce at the end of February before moving higher, topping $96.10 Monday. Today, silver is down 6.1% to $83.43 per ounce.
Is Coeur Mining stock a sell?
Why are precious metals prices falling? For one thing, the U.S. dollar -- also a safe haven -- is strengthening. It costs fewer dollars to buy an ounce of gold or silver today, and so dollar-denominated prices for precious metals are falling.
War can also be inflationary -- which should be good for precious metal prices. But if inflation spooks the Fed into holding interest rates steady, this could lower inflation long term -- or so the thinking goes.
Personally, I expect gold and silver prices to rebound. The problem for Coeur investors is that, at a price-to-earnings ratio of 28x, higher gold and silver prices already seem "priced in." Worse, Coeur's earnings are forecast to fall next year.
Whichever way gold prices move, I'd be cautious buying Coeur stock.
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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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