Gold miners’ leveraged performance

Gold miners are usually a leveraged play on gold prices. In 2018, as the SPDR Gold Shares (GLD) fell 1.9%, the VanEck Vectors Gold Miners ETF (GDX) amplified that loss by falling 9.3%.

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The price action in leveraged gold ETFs such as the Direxion Daily Junior Gold Miners Bull 3X ETF (JNUG) and the Direxion Daily Gold Miners Bull 3X ETF (NUGT) has been more dramatic. JNUG and NUGT have seen losses of 48% and 45%, respectively. In the last one month, while GLD has risen 11.6%, GDX, NUGT, and JNUG have amplified those gains to 25.9%, 91.7%, and 87.1%, respectively.

Company-specific factors

In addition to gold’s price movements, gold miners are also affected by company-specific factors. However, the price movements of miners depending on gold prices will also vary depending on their financial as well as operational leverage.

Among miners, Eldorado Gold (EGO), New Gold (NGD), IAMGOLD (IAG), and Barrick Gold (GOLD) have seen the highest gains of 50.6%, 44.4%, 40.3%, and 36.4%, respectively. Eldorado and New Gold were marred by geopolitical issues at their mines, and the current gold rally is providing them with a nice tailwind. IAG and Barrick Gold are operationally and financially quite leveraged to gold prices.

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