Gold’s run in 2016
Gold prices closed at a rise of just 8.5% in 2016. While this annual rise came after a hiatus of three years, gold prices had been 27% higher at one point in 2016.
Gold prices slipped in the last two months of 2016 following Donald Trump’s US presidential win.
November 2016 was the worst month for gold prices since June 2013. In one month alone, gold’s price fell 8%. Before the election, gold had risen ~20% since the beginning of the year. The Federal Reserve’s rate hike expectations, in addition to Trump’s win, took the best of precious metals’ gains at the year’s end.
Gold prices have, however, started the new year on a positive note. The market got jittery before Trump’s inauguration, and gold posted gains. Trump, however, worked to calm the markets and reiterated his plans to boost the US economy, which led to a fall in gold prices.
Until January 25, 2017, gold prices rose 4.1%. Read New Year’s Bounce: Does Gold Have Shinier Prospects in 2017? for a look at gold’s outlook in 2017.
Despite this post-election trauma, investors in gold ETFs such as the SPDR Gold Trust ETF (GLD), the VanEck Vectors Gold Miners ETF (GDX), and the VanEck Vectors Junior Gold Miners ETF (GDXJ) have benefited the most from gold’s upward journey.
In 2016, silver miners (CDE) (HL) were the best performers, with an average rise of 98%. They were followed by senior gold miners (ABX) (NEM), which saw a rise of 72.3%. Intermediate gold miners, on the other hand, saw a rise of 59%. South African gold miners (AU) (SBGL) saw a rise of 54%, and royalty and streaming companies saw a rise of 50.4%.
In this series, we’ll discuss these categories of miners and their valuation outlooks. In the next article, we’ll discuss the reasons for their diverging performances.