Gold prices and gold miners
Gold miners’ stocks have underperformed most of the market indices and gold itself. The VanEck Vectors Gold Miners Index (GDX) has significantly underperformed the gold price index SPDR Gold Trust (GLD) since 2008.
Since January 2, 2015, GLD has fallen by only 4% while GDX has fallen sharply by 17% as of October 2015. However, most of the gold companies’ share price performances were below GDX’s. Sibanye Gold (SBGL), Gold Fields (GFI), Tahoe Resources (TAHO), and Eldorado Gold Corporation (EGO) all underperformed GLD, falling by 22%, 37%, 32%, and 40%, respectively, while Agnico Eagle Mines (AEM) and Anglogold Ashanti (AU) outperformed GLD and rose by 7% and 3%, respectively.
Gold prices have been very volatile since the start of 2015 due to uncertainty in global growth and the timing of a US Fed rate hike. The lower September US jobs number further diminished chances for a rate hike later this year. However, the lower US jobs number and the slowdown in the Chinese economy positively impacted gold prices.
What we’ll cover in this series
In this series, we’ll discuss various factors such as cost, production, reserves, leverage, financial health, analyst ratings, and valuation multiples, using six notable intermediate gold mining companies in our analysis. An analysis of these companies should help investors understand which could weather the gold price environment in 2H15 better than others.
Major gold ETFs are the VanEck Vectors Gold Miners Index (GDX) and SPDR Gold Trust (GLD). Investors can get gold exposure by investing in these ETFs. Agnico Eagle is one of the largest companies in Gold Miners ETF (GDX), with total holdings of 5.5% in the fund’s portfolio.
Continue to the next part of this series for a closer look at gold production in 2Q15.