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Why Harmony Gold Mining, Endeavor Silver, and Pan American Silver All Jumped More Than 10% Today

What happened

Shares of Harmony Gold Mining (NYSE: HMY) rose as much as 12% on March 1. Following close behind were Endeavor Silver (NYSE: EXK), up as much as 11.5%, and Pan American Silver (NASDAQ: PAAS), up as much as 9.5% or so. At about 2:20 p.m. ET, these precious metals miners were higher by roughly 12%, 10.5%, and 9%, respectively, basically holding on to most of their earlier gains.

So what

There was no news out of Endeavor Silver or Pan American Silver today, but Harmony Gold Mining reported earnings on Feb. 28. Harmony Gold's earnings per share for the six-month period ended Dec. 31 were $0.17 per share, down around 60% from the $0.44 per share it earned in the year-ago period. Gold production was up 4%, but all-in sustaining costs rose a whopping 21%. Even a slightly higher realized gold price, in U.S.-dollar terms, wasn't enough to offset the hit, with the miner's production profit falling 20%. Although not a particularly great update, the stock rose just the same.

Image source: Getty Images.

The reason is that gold prices have been rising in the face of geopolitical tensions. So, too, have silver prices. Although that's been a trend over the past month or so, both of these precious metals were higher in trading today. That makes sense, since in times of crisis investors often seek out safe haven assets. Gold and silver have historically played that role.

Precious metals miners benefit from this in two ways. For starters, higher prices flow through to their top and bottom lines. So Harmony Gold, Endeavor Silver, and Pan American Silver should, in time, all benefit financially from the current rush to safety. However, gold and silver miners are also viewed as safe haven investments because of their direct ties to the metals. Some investors prefer to bypass gold and silver and just put cash into miners, which can lead to price increases in their stocks as well.

Now what

Ultimately, even though Harmony Gold just reported earnings, the story today has little to do with any of these precious metals miners directly. The real issue is a rush to safety in the face of geopolitical tensions. That said, if you are looking for safe haven assets yourself, the best option for most investors will likely be shifting to cash. Gold, silver, and the companies that mine for these metals can rise quickly, but they can also fall just as fast. They are better viewed as diversifying assets to be held in small quantities at all times rather than investments to jump in and out of in an attempt to time market moves.

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Reuben Gregg Brewer 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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