Why Goldgroup Mining Tumbled Today

As the trading week came to a close, precious metals were looking significantly less precious. Gold, silver, and other high-value metals declined in price amid the apparently growing possibility of a rate hike by the U.S. Federal Reserve (Fed).

With that, precious metals companies’ stocks were sold off, for the most part; Exhibit A: Goldgroup Mining (GORO -3.69%), which fell by nearly 4% that trading session.

A hawkish pronouncement

Speculation of a Fed interest rate raise was rife on Friday. That morning, new(ish) Fed chair Kevin Warsh gave a speech at this year’s Jackson Hole Economic Symposium. As usual with the world’s most closely watched central banker, his remarks were closely monitored and scrutinized.

Image source: Getty Images.

His money quote on the day addressed the No. 1 economic fear keeping Americans up at night — inflation. The Fed’s main tool in combating this is to raise rates, with the aim of cooling price rises.

Warsh said that “We must be confident that underlying inflation is moving to our objective, clearly and at sufficient speed. Otherwise, we have work to do.”

That “work to do” part was interpreted by many (myself included) as meaning he would be hawkish on inflation if necessary. From what I see, inflation isn’t set to decline meaningfully, so rate increases could very well be on the horizon. If that occurs, precious metals would be less attractive next to yield-bearing assets such as bonds.

Today’s Change

(-3.69%) $-0.14

Current Price

$3.65

Key Data Points

Market Cap

$511MMarket cap calculated using publicly traded shares outstanding only. Does not include unlisted, private, or dual-class non-traded shares. Implied market cap may vary.

Day’s Range

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$3.48 – $3.83

52wk Range

$1.87 – $6.56

Volume

1.9M

Avg Vol

895.6K

Gross Margin

15.12%