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Why Are Intermediate Gold Miners so Exuberant?

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Nov. 20 2020, Updated 10:50 a.m. ET

Intermediate gold miners

Intermediate gold miners are smaller than senior gold miners in terms of production and market capitalization. However, they are still generally liquid, unlike their junior counterparts (GDXJ). Their geographical diversification is usually lower than that of senior gold miners.

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Outperforming gold prices

As a group, these miners have outperformed gold prices YTD (year-to-date). As of September 5, 2017, the average gain in this group was 22.1%, compared with a 16.3% gain in gold prices (GLD).

Investors, however, should notice that there are huge variations among the performances of the five intermediate miners.

Performing at extremes

Iamgold (IAG) has significantly outperformed its peers as well as the broader gold miners index (GDX) YTD. IAG is trading with a YTD gain of 80%, compared with Eldorado Gold’s (EGO) YTD loss of 35%.

Iamgold announced an 80% increase in its Rosebel’s reserves in July 2017. In September 2017, it announced that the Samaracca is exceeding its initial targets. These announcements are very positive for the company’s production and cost outlook. (Read the series Can IAMGOLD’s Keep Up Its Stock Performance after Q2 Earnings? for an in-depth analysis of the company.)

Eldorado, on the other hand, has had negative news. Its flagship properties in Kisladag, Turkey, ran into technical difficulties, while the issues at its Greek mines have been ongoing.

By comparison, Yamana Gold (AUY), New Gold (NGD), and Agnico Eagle Mines (AEM) have gained 12.5%, 14.9%, and 22.5%, respectively, YTD.

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