A Look at the Gold-Platinum Ratio
The demand for platinum has been very fragile over the past few years due to concerns about sales of diesel-based vehicles.
Call implied volatility takes into account the changes in an asset’s price due to variations in the price of its call option.
Mining companies with high correlations to gold include Randgold Resources (GOLD), Yamana Gold (AUY), Pan American Silver (PAAS), and Coeur Mining (CDE).
Uncertainty in the market since Donald Trump’s victory in the presidential election has helped precious metals and precious metal mining companies.
Among the four precious metals, palladium was the leader until mid-February 2017. Its pace slowed down after that.
The gold-silver spread was trading at 68.5 on February 23, 2017. The spread suggests that it took 68.5 ounces of silver to buy a single ounce of gold.
Precious metal mining stocks are known to closely track the performances of their respective precious metals.
It’s important to understand which mining stocks have overperformed and underperformed precious metals.
Donald Trump’s victory in the 2016 US presidential election initially resulted in fear among precious metal investors.
Newmont Mining (NEM) generated positive free cash flow of $289 million in 4Q16 compared to FCF of -$138 million in 4Q15.
Of the 19 analysts covering Newmont Mining (NEM), 11 issued “buy” recommendations and seven issued “hold” recommendations on the stock.
Newmont Mining (NEM) guided for AISC between $940–$1,000 per ounce for 2017 and $950–$1,050 per ounce for 2018.
Newmont Mining (NEM) ended 2016 with $2.8 billion in cash on hand, and it has one of the best credit ratings in the mining sector.
Newmont Mining (NEM) reported a 7% decline in its reserve estimates for 2016 at 68.5 million ounces compared to 2015.
Newmont Mining (NEM) approved funding for its Northwest Exodus project in June 2016, and the project is now under construction.
Newmont Mining’s (NEM) gold production totaled 1.3 million ounces in 4Q16, which represents 17% growth year-over-year.
Newmont Mining (NEM) released its 4Q16 earnings on February 21, 2017, and reported adjusted EPS of $0.25, compared to the consensus estimate of $0.33. NEM’s top line of $1.8 billion beat the consensus revenue estimate of $1.7 billion.
On a year-to-date basis, AngloGold Ashanti, Hecla Mining, Eldorado Gold, and Alacer Gold have seen reasonable rises of 25.8%, 23.1%, 14.3%, and 31.7%, respectively.
Mining companies that have high correlations with gold include B2Gold (BTG), Royal Gold (RGLD), Agnico Eagle Mines (AEM), and Primero Mining (PPP).
Precious metals mining stocks are known to closely track the performances of precious metals. Mining stocks often display more volatility than precious metals.