Gold versus gold miners
Gold prices haven’t been able to catch a break even as geopolitical concerns have become more pronounced. On August 15, gold prices fell to a 19-month low of $1,173 per ounce as the US dollar continued its winning streak. The precious metal appears to have lost some of its safe-haven appeal.
The SPDR Gold Shares ETF (GLD), which tracks physical gold prices, has underperformed the broader markets, falling 9.3% YTD (year-to-date). The SPDR S&P 500 ETF (SPY), which tracks the S&P 500 Index, has risen 6.8%, while the technology-heavy NASDAQ Composite Index (QQQ) has risen 15.5%.
A stronger US dollar (UUP) and interest rate hikes by the Fed, as well as the future outlook of the interest rate path, have been the major factors driving gold’s weakness since April.
You can read Why the Risk-to-Reward Ratio Could Favor Gold Bulls Now for more on gold’s price outlook.
Gold miners’ performances
This year isn’t turning out great for gold miners either. After rising an average 8.4% in 2017, senior gold miners have fallen 23.6% YTD as of August 17. The group has underperformed the VanEck Vectors Gold Miners ETF (GDX), which has returned -19.4% in the same period. GLD has returned -9.3%.
As you might expect, there are variances in individual senior gold miners’ performances. Barrick Gold (ABX) and Kinross Gold (KGC) have seen falls of 30.8% and 33.1%, respectively. Goldcorp (GG) and Newmont Mining (NEM), on the other hand, have dropped comparatively less, losing 15.9% and 14.6% of their stock values, respectively.
The second-quarter earnings season for major senior gold miners is now over. In this series, we’ll take a look at how these miners performed in the quarter. We’ll try to decipher which senior miners fared the best in terms of costs, production, guidance changes, and debt management. We’ll also see how they’re expected to perform going forward. We’ll conclude the series by summarizing analysts’ sentiments and looking at the relative valuations of the stocks under review.
Let’s start by seeing which gold miners missed market expectations, which miners beat expectations, and why.