Why Gold Fields Stock Dropped Today

Gold Fields Limited (NYSE: GFI) stock tumbled 6.6% through 12:15 p.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 6.9% at $71.87 per ounce, and gold prices were down 4.4% at $4,352.30.

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What's got gold investors feeling blue today?

2025 rewarded silver and gold investors mightily. Silver started the year near $20 an ounce, but more than tripled in price through last night, and gold prices are up 65% year-to-date. For commodities that mostly derive their value from investors seeking hedges against inflation -- unlike stock in a business, which creates value by producing goods and services over time -- these are fabulous gains.

And they can make investors think it's time to sell and take profits.

This seems to be what's happening today. Moreover, pundits suggest what began as a bit of innocent profit-taking is now building into a "flash crash" as investors, who bought silver and gold on margin, start facing margin calls, increasing the pressure to sell before their gains vanish.

Is Gold Fields stock a sell?

Gold Fields investors should resist the temptation to sell.

Why? Consider that, at just 21 times trailing earnings, Gold Fields stock hardly looks expensive -- not with analysts forecasting Gold Fields will grow its earnings north of 50% annually over the next five years. Granted, free cash flow appears somewhat weaker than reported earnings, but not alarmingly so. And Gold Fields pays a modest 1.3% dividend yield, which adds to the stock's attraction.

All things considered, Gold Fields stock still looks like a buy.

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.