While gold miners have been out of favor for a long time, that may be about to change. As uncertainty in the market is increasing, gold prices are poised to rise.
According to the COT report for the week ended June 26, 2018, money managers were barely net long on gold with just over 4,000 net speculative long contracts.
The Global X Silver Miners ETF (SIL) and the VanEck Vectors Gold Miners ETF (GDX) have fallen about 7.6% and 1.8%, respectively, during the last month.
Among the four major streaming companies we’ll discuss in this part of our series, Franco-Nevada (FNV) has the highest forward EV-to-EBITDA multiple of 22.8x.
In addition to the US dollar playing on precious metals, US interest rates and the decisions by the Federal Reserve have also historically had a substantial impact on these safe havens.
Among these four miners, Newmont has shown the highest correlation to gold, while Franco Nevada has seen the lowest correlation on a YTD (year-to-date) basis.
In this part of our series, we’ll look at the correlation between gold and four mining stocks: Franco-Nevada (FNV), Coeur Mining (CDE), Kinross Gold (KGC), and Eldorado Gold (EGO).
Precious metal mining stocks tend to take their cues from gold prices. Gold is the most crucial of the four precious metals, and its direction becomes the direction for the other three metals most of the time.
GDX and GLD The VanEck Vectors Gold Miners ETF (GDX) tracks the performance of the NYSE (New York Stock Exchange) ARCA Gold Miners Index. Its major holdings are senior and intermediate precious metal miners listed in the United States and Canada. Currently, Newmont Mining (NEM), Barrick Gold (ABX), and Newcrest Mining are the fund’s top […]
After disappointing the markets for a long time, the US dollar (UUP) has finally rallied. The US non-farm payrolls data released on February 2, 2018, were better than expected.
The iShares MSCI Global Gold Mining ETF (RING) and the VanEck Vectors Junior Gold Miners ETF (GDXJ) have risen 5.0% and 1.1%, respectively, during the last one-month period.
Looking ahead for 2018, industry analysts stated in a Bloomberg article that they expect gold to perform better early in the year led, by the “January effect.”
Commitment of Traders report The CFTC (Commodity Futures Trading Commission) releases the Commitment of Traders (or COT) report every Friday. It presents a breakdown of the open interest positions of all major contracts in the futures market up until the Tuesday prior. It has four main categories of traders: producers swap dealers money managers other reportables […]
Starting 2018 on the wrong foot After declining by ~10% in 2017, the US dollar (UUP) has extended its fall in 2018. It has fallen by ~2% against a basket of currencies so far, trading close to three-year lows. There are many potential reasons for the slump in the dollar. Some of them are related to […]
As we know, precious metals are closely tied to movements in US interest rates. Bonds and equities are both yield-bearing assets, so a rise in yields often causes a slump in demand for assets such as gold and silver.
New Gold, Agnico-Eagle Mines, Franco-Nevada, and Cia de Minas Buenaventura have call-implied volatilities of 45.2%, 24.4%, 21.7%, and 31.2%, respectively.
The performance of gold and silver in 2017 is weaker than most other industrial metals. There are many factors that explain the weaker performance of precious metals.
Miners’ correlation with gold Gold is regarded as the most important precious metal, and most miners are known to follow its price trends. In this part of the series, we’ll look at Wheaton Precious Metals (SLW), Franco-Nevada (FNV), Coeur Mining (CDE), and Barrick Gold (ABX). The prices of mining-based funds are also closely related to those of […]
Gold, silver, and platinum all had a down day on Tuesday, December 13, mainly due to speculations over the Federal Reserve’s pending interest rate decision.
Although the US dollar has been the most important element contributing to changes in precious metals, the upcoming December meeting of the Federal Reserve has taken all of investors’ attention.
While geopolitical tensions, low US inflation, and uncertain policy reforms have been supporting gold, the other key factors have been working against it.
Correlation analysis Mining stocks’ performance usually depends on precious metal prices. Correlation analysis can give investors some perspective on how mining stocks relate to precious metals, especially gold. In this part of our series, we’ll look at four miners—Royal Gold (RGLD), Goldcorp (GG), Franco-Nevada (FNV), and Randgold Resources (GOLD)—and their correlation with gold. On Monday, the ETFS Physical […]
Besides the impact of interest rates, there are also other global indicators that could play on precious metals—the most important being the US dollar.
As of October 27, 2017, First Majestic (AG), Franco-Nevada (FNV), Coeur Mining (CDE), and Harmony Gold (HMY) had implied volatility readings of 54.6%, 25.5%, 46.7%, and 53.3%, respectively.
On September 29, Alamos, First Majestic Silver, Franco-Nevada, and Pan American had call implied volatilities of 46.9%, 54.6%, 25.5%, and 34%, respectively.
The negative sentiment toward gold prevailed on Friday, September 29, the last trading day of the month. Gold futures for November expiration fell 0.3%.
North Korean tensions Like the US dollar, global tensions can be responsible for precious metal price fluctuations. North Korea has interpreted US president Donald Trump’s comments as a declaration of war, stating that Pyongyang has the right to take countermeasures, including shooting down US bombers outside of its airspace. The ongoing unrest in the Korean peninsula has led to a global […]
Among the four major streaming companies we’re looking at in this part, Franco-Nevada (FNV) has the highest forward EV-to-EBITDA multiple of 28.8x, a 35.0% premium to its peers.
Gold prices have been on a roller coaster ride, given the on and off situation with North Korea. A missile test and gold’s safe-haven appeal have propelled prices higher, and then they’ve fallen back again.
Among the four miners we’re looking at, Gold Fields has the highest correlation to gold on a YTD basis, while Sibanye Gold has the lowest correlation to gold.
The probability of the Fed hiking rates again in 2017 may not be very strong after the weak employment data. However, there’s still a strong possibility of a few rate hikes in 2018.
