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Why Gold Fields, First Majestic Silver, and Other Gold and Silver Stocks Surged Today

Motley Fool - Mon Mar 13, 2023

What happened

Shares of precious metals companies jumped on Monday as the prices of gold and silver rose sharply. Here's how some of the most popular gold and silver stocks were performing as of 3 p.m. ET:

  • Gold Fields(NYSE: GFI), up 12%
  • AngoGold(NYSE: AU), up 10%
  • Harmony Gold Mining(NYSE: HMY), up 10%
  • Equinox Gold (NYSEMKT: EQX), up 15%
  • First Majestic Silver(NYSE: AG), up 12%
  • Fortuna Silver Mines(NYSE: FSM), up 11%

So what

The startling collapse of SVB Financial Group's Silicon Valley Bank and other recent bank failures have sparked fears of an imminent banking crisis. Banking regulators took action to stem a financial contagion by ensuring Silicon Valley Bank's depositors would be made whole. But concerns that the worrisome situation might not be over just yet mounted on Monday as shares of other regional banks plunged.

Investors seeking shelter from this financial storm rotated into gold and silver, which tend to appreciate or at least maintain their value during periods of economic distress. The prices of silver and gold were up more than 6% and 2%, respectively, as of 3 p.m. ET on Monday.

Precious metals producers tend to generate higher profits when the prices of gold and silver rise. Investors know this, and they bid up their shares in response.

Now what

We can all hope that the actions taken by regulators to stem another banking crisis will be successful. But judging by the prices of many bank stocks today, the market isn't ready to take that leap of faith just yet.

Thus, the prices of gold, silver, and companies that produce these precious metals could continue to rise in the coming days as more people seek out defensive investments.

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SVB Financial provides credit and banking services to The Motley Fool. Joe Tenebruso has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends SVB Financial. The Motley Fool has a disclosure policy.

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