Why Hecla Mining Dropped Again Today

Hecla Mining (NYSE: HL) banal declined 5% done 12:30 p.m. ET Wednesday aft golden prices took different limb little -- and metallic fell adjacent much steeply. This morning, the U.S. Bureau of Labor Statistics reported the Consumer Price Index (CPI) roseate 2.4% for a 2nd consecutive period successful February.

These 2 things are connected.

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There's warfare successful the Mideast, and it whitethorn past a while. Investors often presumption precious metals similar metallic and golden arsenic harmless havens successful times of conflict. Silver prices soared 2.5% successful the contiguous aftermath of the attacks connected Iran.

War tin besides beryllium inflationary, though, particularly erstwhile it strangles planetary lipid supplies and drives up substance prices. So portion CPI held dependable successful February (albeit inactive supra the Fed's 2% ostentation target), the interest is that the March information volition amusement a crisp emergence successful inflation.

If this happens, investors whitethorn merchantability metallic (which doesn't wage interest) and bargain bonds alternatively (which bash wage interest, and progressively more interest arsenic ostentation rises). In a nutshell, this is wherefore metallic prices are down 5% to $85.14 an ounce today.

As the nation's biggest metallic mining stock, it makes consciousness that Hecla mining banal would autumn contiguous -- indeed, autumn precisely the aforesaid magnitude metallic prices are falling. It doesn't help, either, that Hecla is simply a richly priced stock, costing astir 45 times trailing earnings.

Granted, Hecla banal looks cheaper based connected forward earnings -- little than 29x. But this depends connected net continuing to rise. If ostentation surges and metallic prices fall, Hecla banal mightiness not extremity up overmuch cheaper adjacent twelvemonth than it is now.

With plentifulness of inexpensive golden stocks to stake connected instead, I'd debar this costly metallic miner.

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