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Why Gold Mining Stocks’ Performance Has Diverged Year-to-Date

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Gold’s run

While gold has been volatile overall in 2017 so far, profit-taking has taken over in the metal space recently. Market participants are expecting a rate hike from the Fed in December, which could be negative for gold prices. Year-to-date, gold prices (GLD) have risen 11% as of November 21, while the gold miners index (GDX) has risen 8.5%. Gold miners didn’t strictly follow gold prices. In 2017 year-to-date, gold miners have been impacted more by company-specific factors than gold price movements.

Gold miners’ performances

While senior gold miners enjoyed a great 2016 with an average gain of 72%, 2017 hasn’t been so favorable. Senior miners as a group have gained just 2% year-to-date (or YTD) up to November 21. They’ve also underperformed the VanEck Vectors Gold Miners ETF (GDX) as well as the SPDR Gold Shares (GLD), which have returned 8.5% and 11.1% YTD, respectively.

As you might expect, there are huge variances in individual senior gold miners’ performance. On the one hand, Kinross Gold (KGC) has risen 37.0% YTD, and on the other hand, Barrick Gold (ABX) has fallen 12.4%.

Goldcorp (GG) has also fallen 2.1% while Newmont Mining (NEM) has risen 7.0%.

Series overview

The 3Q17 earnings season for major senior gold miners is now over. This series is an opportunity to see how these miners performed in 3Q17. We’ll gauge which senior miners fared best in terms of production, costs, guidance changes, and debt management. We’ll also analyze how they’re expected to progress going forward. We’ll conclude this discussion with analyst sentiment and relative company valuations.

In the next part of this series, we’ll discuss which gold miners missed market expectations and which beat expectations and why.

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