Trump Uncertainty: Which Gold Stocks Are Analysts Betting On?



Gold’s performance in 2016

Gold prices rose just 8.5% in 2016. That annual rise came after a gap of three years, but gold prices were 27.0% higher at one point in 2016.

Gold prices fell in the last two months of 2016 after Donald Trump won the US presidential election. Before the election, gold had risen ~20.0% since the beginning of the year. The Federal Reserve’s rate hike expectations on top of Trump’s win took the best of precious metal gains at the end of the year.

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Gold ETFs

Despite these post-election changes, investors in gold ETFs have benefited the most from gold’s upward journey. Those ETFs include the SPDR Gold Shares (GLD), the VanEck Vectors Gold Miners ETF (GDX), and the VanEck Vectors Junior Gold Miners ETF (GDXJ). Depending on their leverage to gold prices, individual miners have also outperformed gold prices in 2016.

In this series

In this series, we’ll divide miners into the following five categories:

  1. senior gold miners
  2. intermediate gold miners
  3. South African gold miners
  4. royalty and streaming companies
  5. silver miners

We’ll analyze these miners’ performances in 2016 and look at some reasons for their divergence. As you can see in the above graph, Coeur Mining (CDE), Hecla Mining (HL), Iamgold (IAG), and First Majestic Silver (AG) significantly outperformed precious metal miners in 2016.

We’ll also look at Wall Street analysts’ recommendations and ratings for these precious metal miners. It’s important to note that analysts’ estimates usually lag behind price movements. We see upgrades when stocks have already risen. As for downgrades, they come when a company has already seen lower prices.

That being said, changes in analysts’ estimates are key drivers of short-term price movements. It’s a good idea to keep track of changes in analysts’ estimates, because they offer insight into what the market expects from a company.

In the next part of the series, we’ll look at analysts’ ratings for senior gold miners.


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