Key Points
This was due largely to hawkish remarks from Fed chair Kevin Warsh.
Higher rates would mean higher yields for assets like bonds.
Hardly for the first time in recent trading sessions, the prices of gold and silver were sliding on Friday. That didn't bode well for any company involved in either, and SSR Mining (NASDAQ: SSRM) mines and produces both. The last trading day of the week saw the company's stock decrease by more than 4%.
Ready to do the work
Precious metals were taking it on the chin largely because of comments made by Federal Reserve (Fed) chair Kevin Warsh. Although he tends to be circumspect, like many central bank heads, his utterances on Friday at the annual Jackson Hole Economic Symposium suggest a hawkish approach to fighting inflation.
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Warsh effectively said that if inflation doesn't moderate or decline, "we have work to do."
That's as close as he's come to saying he'll push for the Fed to raise interest rates. Higher rates are no friend of precious metals, as they tend to drain investment capital away from them. Investors are attracted by the rising yields of assets like bonds.
Looming hikes
Speculation is growing that the Fed will not only raise rates, but do so as soon as the next monthly meeting of its Federal Open Market Committee (FOMC). At this point, given the persistence of inflation, it wouldn't surprise me if that were to occur.
Given the record-breaking rally of gold, silver, and other precious metals earlier this year, it feels to me that they have more room to fall. Since that's probably going to happen sooner rather than later, I wouldn't be a buyer of SSR Mining stock now.
Eric Volkman 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.