The Fed keeping the petal to the metal in this latest round of asset purchases promises to keep interest rates lower, for now. They tumbled today, with the yield on the 10-year Treasury note plunging to 2.71% after the announcement from 2.90% earlier in the day.
The no-taper news added a quick 100 points to the Dow Jones Industrial Average and the rally was especially feverish in the emerging markets, and in anything commodity-related: steel, coal and especially metals. Gold is up 4.4% from today’s $1,300 low, thanks to the Fed’s statement. Gold tends to move higher when real interest rates (nominal rates minus inflation) are going lower, and that’s what happened today. Check out the spike in gold at 2:00 p.m.
Silver, gold’s more rambunctious cousin, shot 8.7% higher from its intraday low to trade above $23 per ounce. The iShares Silver Trust (SLV), which tracks the metal, was up 6.44% on the day. The SPDR Gold Trust (GLD) gained 4.47%.
The Silver miners are riding high. Up nearly 10% on the day are Vancouver-based Pan American Silver (PAAS), which sports a beefy 4.5% dividend yield, and Silver Wheaton (SLW), which yields 1.6%. Silvercorp Metals (SVM) is up almost 15%, and Silver Standard Resources, also based in Vancouver, B.C., is nearly 13% higher.
On the gold side. Newmont Mining (NEM) and Goldcorp (GG) are both up better than 9%. Barrick Gold is up 11%. Goldcorp yields 2.3% and Barrick 1.1%. Newmont links its payout to the price of gold, and at average prices for the second quarter its yield works out to 3.5%.