Hekla Mining (NYSE: HL ) The stock was down 2.5% as of 11:35 a.m. Monday as gold prices fell — but silver prices rose.
The war in the Middle East continues, prompting investors to buy gold and silver as safe havens. However, a few macroeconomic trends are interfering with that instinct, and that’s been bad news for Hekla stocks lately.
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Hecla mainly silver mines. According to TradingEconomics.com, the price of silver closed at $93.73 an ounce at the end of February. It rose again, reaching $96.10 a week ago. Silver was lower again, but is up 0.6% to $84.81 an ounce today — which is have to Good news for Hekla.
Gold is the problem, and Hekla also mines gold. Gold closed in February at around $5,278. Prices rose when US and Israeli forces began bombing Iran, hitting as high as $5,416 last Monday before retreating. At last report, gold was trading at $5,095 an ounce, down 1.2% from Friday’s close.
Silver is still 12% off its recent high, though, only 6% lower than gold. Thus silver has a lot of room for improvement.
Broadly speaking, the US dollar index, which compares the value of the dollar against a basket of international currencies, has risen about 1.7% since the start of the war. A stronger dollar means you need fewer dollars to buy an ounce of silver. Thus, when the dollar rises, the price of silver (in dollar terms) falls.
Interest rates can also affect the price of silver. When interest rates rise, investors face a choice between owning silver, which doesn’t pay interest, and owning bonds, which do. Investors may sell silver to buy bonds, and when that happens – again – the price of silver falls.
That’s why Hekla stock is down today.
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