Sector Snap: Precious mining stocks slump
NEW YORK (AP) — Shares of mining companies fell Thursday after U.S. Federal Reserve Chairman Ben Bernanke said the central bank may be done with monetary stimulus by next year, sending gold and silver to their lowest prices in about two years.
On Wednesday Bernanke said the Fed could start winding down its quantitative easing program by the end of the year because the U.S. economy is showing improvement. For almost five years the Fed has been buying $85 billion in financial assets every month to keep long-term interest rates low, encouraging borrowing and spending. The purchases could slow this year and end in 2014, Bernanke said.
Stocks traded lower on the comments and metal prices declined. Prices for gold and silver climbed in recent years as precious metals were seen as alternatives to the dollar. As the dollar has regained strength, a trend that continued Thursday, gold and silver prices have slumped. On Thursday spot gold prices fell about 6 percent and silver prices fell 8 percent.
"For the past few years the commodity markets have been supported by the devaluation of the U.S. dollar," said Kitco.com analyst Jim Wickoff. "Now that the Fed appears ready to 'take the punch bowl away from the party,' many markets are spooked."
In afternoon trading Barrick Gold Corp. fell $1.28 or 7.1 percent, to $16.73, Newmont Mining lost $1.79, or 5.6 percent, to $30.11, and Goldcorp Inc. sank by $2.01, or 7.7 percent, to $24.19. Among silver mining companies, Pan American Silver Corp. gave up 32 cents, or 2.8 percent, to $11.16, Silver Wheaton Corp. dropped $1.83, or 8.3 percent, to $20.38 and Hecla Mining Co. fell 17 cents, or 5.4 percent, to $3.
Among rare earth metals miners, Molycorp Inc. shed 16 cents, or 2.9 percent, to $5.45 and Thompson Creek Metals Co. lost 13 cents, or 4.4 percent, to $3.05.