2012 Republican primaries and gold stock price

Do gold stocks take a hit when Mitt Romney wins a primary?

gold stocks yesterday

This is better than hemlines.

The candidates

Yesterday, February 29, 2012, the day after Mitt Romney won the Arizona and Michigan primaries convincingly (pretty much), in a very highly touted contest, gold and silver stocks plunged across the board. That includes gold futures, gold mining and related mining, and silver along with gold. You might think the stability and reassurance provided by a big win from Mr. Wall Street himself would buttress high-end markets. Instead, everything gold went down.

Check this quick list.

“Nothing gold can stay,” Robert Frost said. One understands that gold and precious metal companies are notably volatile stocks; commodities are volatile in general; mining is an extremely hazardous occupation; international markets and foreign companies and foreign governments complicate the market further. Gold and silver were described by a cable tout just yesterday, as chance would have it, as particularly “emotional” markets. Also, needless to say, one event does not make a pattern.

The image

Still—are gold stocks, gold and silver, silver stocks, and related mining company stocks going up every time somebody besides Romney wins? Are they going down, almost across the board, every time Romney wins? So far this season, it looks that way.

Checking the GOP primary schedule thus far this year, and double-checking the primary results thus far–in brief, gold stocks go down every time Romney wins.

• On Tuesday Jan. 3, Romney was thought to have won the Iowa caucuses—very narrowly, but an announced win. Gold and silver were down somewhat on Jan. 4. Ron Paul came in third in Iowa.

• Tuesday, Jan. 10, Romney won the New Hampshire primary, but the win was discounted as a next-door-state inevitability. Ron Paul came in a good second place. The next day, gold and precious metals were up somewhat.

• Late on Friday Jan. 20, the Iowa GOP announced that Santorum had actually won Iowa. This late-breaking news, which might be referred to as a Friday dump-type announcement, also came late at night.

• On Saturday Jan 21 Newt Gingrich won the hotly contested and much-hyped South Carolina primary. On Monday Jan. 23, gold and silver shot up to their highest in a month. It should be noted that Gingrich had publicly boosted gold—Gingrich to commodities sector: “HIRE ME!”–and that Iran was banned from trading in gold. Romney finished second in South Carolina, Ron Paul fourth.

• Saturday Jan. 28, the Maine caucuses began, to continue through the next days, won by Romney but with Ron Paul coming in a strong second—and some Paul-leaning precincts not reported in the vote tally. In the climate of another disputed win, on Jan. 30 and Jan. 31, gold and silver were mixed but up.

• Tuesday Jan. 31, Romney won the Florida primary, followed by Gingrich and Santorum, with Ron Paul in fourth place. On Feb. 1, South African gold stocks were up, but the U.S. picture was more mixed.

• Saturday Feb. 4, Romney won the Nevada caucuses, followed by Gingrich and Paul. Monday Feb. 6 was not a disaster for gold stocks, down somewhat, but gold was also down, and gold stocks were described gently as ‘stabilized’.

• Tuesday Feb. 7, Santorum swept the Colorado caucuses, the Minnesota caucuses, and Missouri’s non-binding primary. Ron Paul came in second in Minnesota. Early on Feb. 8, gold and silver stocks enjoyed a definite rally, up, then down, ending mixed.

• Tuesday Feb. 28, Romney won the Arizona primary and the Michigan primary, solidly defeating second-place finisher Santorum. On Feb. 29, gold stocks were down significantly, silver ditto, mining ditto, etc.

Note: This is obviously, and avowedly, a superficial discussion, not a serious argument or a prediction that gold and silver stocks, futures, mining companies and bullion will decline on March 7 if Romney does well on ‘Super Tuesday.’ Even if the correlation above were definitive instead of highly selective—I left out all the other days–there is a margin of diminishing returns. A Romney win may become less and less newsworthy over coming weeks, and if so, the credibility of touting any other candidate as the alternative to Romney will also decline. Thus any relationship between media-hyped primaries and a market, if there is any, will also be affected.

Also, note that candidate Ron Paul openly advocates returning to the gold standard, and there is no question about his sincerity. Financial disclosure forms filed by Paul reveal that he has invested in several gold companies. What effect if any Paul’s policy statements might have on gold stocks is unclear, but they may have some effect.  Maybe any seeming relationship between Romney’s fortunes and gold markets is really a reflection of a relationship between Ron Paul’s campaign and the markets.

Still, it is more fun to follow the ups and downs of a stock price, as with this company, than it is to follow hemlines, which have been all over the place for decades. And just for fun—note that indeed the stock price of this particular gold-aimed company traded down on Feb. 1, 6^th, 8^th and 29^th.

It is somewhat of a buzz-kill to note that it also traded down somewhat on several other days the past month.

Post hoc ergo propter hoc.