Gold and Silver Surge After Greece Bailout Deal

On Tuesday, gold (NYSEARCA:GLD) futures for April delivery jumped $32.60 to settle at $1,758.50 per ounce, while silver (NYSEARCA:SLV) futures gained $1.21 to close at $34.43.

Greece finally reached a deal with international lenders to secure another bailout early Tuesday.  In exchange for 130 billion euros ($172 billion) to stave off default, Greece has accepted severe austerity measures and strict conditions, and came to an agreement with private investors in Greek debt to accept even steeper losses than expected.

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Though a deal had long been expected, the European Central Bank and the International Monetary Fund wrestled through the night over a discrepancy in the amount of Greece’s debt to be reduce, finally agreeing that Greece would reduce its debt to about 120.5 percent of gross domestic product by 2020, from about 160 percent now.  Holders of Greek debt, who agreed in October to accept a 50 percent write-down on the face value of their bonds, ultimately agreed to take a 53.5 percent loss.

With more bailout funds comes higher precious metal prices.  In afternoon trading, the SPDR Gold Trust (NYSEARCA:GLD) gained 2 percent, while the iShares Silver Trust (NYSEARCA:SLV) jumped 3.3 percent.  Gold miners (NYSEARCA:GDX) such as Barrick Gold (NYSE:ABX) and Goldcrop Inc. (NYSE:GG) both increased 2.8 percent, while shares of Yamana Gold (NYSE:AUY) surged more than 4 percent.  Silver miners (NYSEARCA:SIL) Endeavour Silver (NYSE:EXK) and First Majestic (NYSE:AG) gained 3.7 percent and 1.9 percent, respectively.

Shares of Hecla Mining (NYSE:HL) surged 12 percent after announcing fourth quarter results.  The miner earned $18.6 million (7 cents per share), compared to a net loss of $9.7 million in the year-earlier quarter.  “Hecla faced significant challenges in 2011; however, what is different today than at any other time in our history is that our financial position, asset base, and growth opportunities are the strongest they have ever been,” said Hecla’s President and Chief Executive Officer, Phillips S. Baker, Jr.

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To contact the reporter on this story: Eric McWhinnie at staff.writers@wallstcheatsheet.com

To contact the editor responsible for this story: Damien Hoffman at editors@wallstcheatsheet.com