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These Stocks Are the Bright Spot in an Ugly Market

For a while on Wednesday, it looked as though major stock market indexes would be able to bounce back from some of their recent declines to start 2022. The Dow Jones Industrial Average (DJINDICES: ^DJI), Nasdaq Composite (NASDAQINDEX: ^IXIC), and S&P 500 (SNPINDEX: ^GSPC) were all up at times during the day. However, late-day concerns about the political climate in Washington, the future of monetary policy, and increasing downward momentum all contributed to send stocks lower by the close.

Index

Daily Percentage Change

Daily Point Change

Dow

(0.96%)

(340)

S&P 500

(0.97%)

(44)

Nasdaq

(1.15%)

(167)

Data source: Yahoo! Finance.

Yet as ugly as the stock market was overall, there was a bright spot. Gold stocks jumped significantly, reflecting concerns about inflation as well as some positive fundamental news from one of the giants of the industry. Here's more about how gold managed to shine on Wednesday.

Image source: Getty Images.

All that glitters

As is often the case, gold stocks rose in large part because precious metals prices were high in the commodity markets. Gold finished higher by $27 per ounce to finish around $1,841, which was its best level since last November. Silver prices followed suit, with gains of almost 3% to climb above the $24 per ounce mark.

Industrial precious metals also did well. Platinum jumped $45 per ounce to $1,026, while palladium was higher by an even healthier $98 per ounce to $1,944.

Many market participants pointed to gold's ascendancy as a sign of demand for safe haven investments. Some had thought that cryptocurrencies had replaced gold as a primary store of value, but recent movements in key crypto assets suggest that correlations between crypto and high-growth stocks have been much more extensive than hoped.

In addition, investors have historically seen gold as an inflation hedge. With multi-decade highs in inflation rates not just in the U.S. but also in the U.K. and Canada, the gold market is getting back some of its luster.

Big earnings for Barrick

Also lifting sentiment about gold stocks was industry giant Barrick Gold (NYSE: GOLD), which reported preliminary production results this morning. Barrick just barely managed to eke its full-year gold production into its guidance range of 4.4 million to 4.7 million ounces, projecting 4.44 million ounces in the report. Similarly, Barrick believes that copper production for 2021 came in at 415 million pounds, near the low end of its 410 million to 460 million pound guidance.

Barrick's fourth-quarter gold production numbers showed sequential growth from the third quarter, as a couple of key mining assets rebounded following repairs of essential processing equipment. Copper showed similar strength.

Perhaps the biggest positive surprise was that Barrick reported big declines in its costs. Its all-in sustaining cost per gold ounce is expected to be down 4% to 6% from the previous quarter, while cash copper costs will likely fall double-digit percentages. It took large expenditures on new mining equipment and operations at its Lumwana facility to cause copper all-in sustaining costs to rise.

As a result, Barrick stock was up nearly 9% on Wednesday. Other precious metals producers saw even bigger gains, including a 16% rise for Harmony Gold (NYSE: HMY) and gains of 13% for Gold Fields (NYSE: GFI) and First Majestic Silver (NYSE: AG).

With continued uncertainty in the financial markets, gold could pick up momentum. Of course, the stocks could lose ground just as quickly if investors regain confidence in the broader stock market -- but for now, gold seems to be having its day.

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Dan Caplinger 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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