After rising impressively in August, gold prices have taken a breather for now. The continuing tensions between the US and North Korea, weaker-than-expected US (SPY) (SPX) economic data, and a weaker US dollar helped gold prices in the second week of August.
While gold prices remained buoyant, gold miners didn’t religiously follow gold prices. In 2017 year-to-date, gold miners have been impacted more by company-specific factors rather than gold price movements.
Gold miners’ performances
Senior gold miners (GDX) had a great year in 2016 on the back of stable precious metal prices. The scenario has changed in 2017 as senior gold miners as a whole underperformed most other categories of gold miners year-to-date (or YTD).
There are, however, huge divergences among their performances depending on company-specific factors. Kinross Gold (KGC) has significantly outperformed its peers by rising 33.3% through August 14, 2017. Newmont Mining (NEM) and Barrick Gold (ABX) have risen 5.8% and 4.6%, respectively.
Goldcorp (GG), on the other hand, underperformed its peers by falling 5.8% YTD. The VanEck Vectors Gold Miners ETF (GDX) has risen 9.3% through August 14, 2017. Barrick Gold is the largest holding of the VanEck Vectors Gold Miners ETF (GDX) at 10.5% of GDX’s portfolio.
The 2Q17 earnings season for the major senior gold miners has already ended. We’ll use our analysis in this series to gauge which senior miners fared better than others in terms of production, costs, guidance changes, and debt management.
We’ll also discuss the analyst sentiment toward these stocks and the estimates for these companies. We’ll sum up our discussion by looking at these companies’ relative valuations and talking about their future valuation catalysts.
In the next part, we’ll see which miners beat market expectations and which ones did not. We’ll also see the reasons for the beats and the misses.