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Analysts’ Views: Is It Time to Look at Gold Miners?

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The gold miner space

This year started on a lukewarm note for gold and gold miners, and things started worsening after April. Gold prices have failed to draw a bid in 2018 despite many market uncertainties, including trade war tensions, the emerging market (EEM) currency crisis, and other geopolitical concerns.

Year-to-date, gold prices have fallen 6.4%, and they’re currently down 9.6% from their April peak. For more on gold’s price outlook, you can read Why Gold’s Upside Potential Seems to Outweigh Downside Risks.

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Stock performances

Gold equities (NUGT) are essentially a leveraged play on gold prices. In 2018 so far, while the SPDR Gold Shares ETF (GLD) has fallen 6.4% YTD (year-to-date), the VanEck Gold Miners ETF (GDX) has magnified that loss with a fall of 14.5%. 

Until October 11, the SPDR S&P 500 ETF (SPY), which tracks the S&P 500 Index (SPX), has risen 2.0%. The PowerShares QQQ Trust, Series 1 ETF (QQQ), which tracks the tech-heavy NASDAQ Composite Index, has risen 8.9% in the same period. The recent market sell-off, however, has helped gold and miners regain some of their lost luster. You can read Gold, Miners Have Surged on the Market Rout-What’s the Upside? for the potential upside to gold and miners on growing market concerns.

Gold mining stocks’ performances varied widely year-to-date, mainly due to companies’ earnings and 2018 outlooks. Year-to-date, all major senior and intermediate gold miners have fallen. Barrick Gold (ABX), Goldcorp (GG), Newmont Mining (NEM), and Kinross Gold have declined 13.1%, 15.4%, 12.8%, and 31.5, respectively.

In this series

In this series, we’ll look at Wall Street analysts’ recommendations and ratings for the major gold miners. It’s important to note that analysts’ estimates usually lag price movements. We see upgrades when stocks have already risen. As for downgrades, they come when a company has already seen lower prices.

Still, you should keep track of changes in analysts’ estimates because they offer insight into what the market expects from a given company.

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