Goldcorp Inc

When the Federal Reserve chair, Janet Yellen, testified to Congress on February 11, she affirmed the Fed’s consideration of negative interest rates. Under a negative interest rate scenario, investors would pay interest to the bank for holding their money.

China is the largest gold producer in the world, accounting for 14% of total production. East Asia as a whole produces 21% of the total newly mined gold. Latin America produces around 18% of the total.

For Kinross Gold, the analyst recommendations are equally divided between “buy” and “hold” at 44% each, while 11% of the analysts recommend a “hold.”

Fears in the overall financial market about a Brexit, the possible exit of Britain from the European Union, have abated. This helped gold fall.

As the US dollar lost some ground on February 20, 2017, its weakening gave a push to gold prices. Gold rose ~0.2% over its previous trading day’s close.

Kinross Gold (KGC) produced 671,956 GEOs (gold equivalent ounces) in 1Q17, which represents a 2.3% year-over-year decline and a sequential drop of 10.0%.

Goldcorp’s (GG) all-in sustaining costs (or AISC) are falling. In 2013, its AISC was $1,031 per ounce. It expects the AISC to be in the range of $950–$1,000 for 2014.

Goldcorp (GG) reported its 3Q17 results after the market closed on October 25, 2017. It reported EPS (earnings per share) of $0.13, which beat analysts’ expectations by $0.02.

Goldcorp’s 4Q16 results beat market expectations, mainly due to lower costs and higher gold prices. The market was happy with the company’s results.

Cheaper oil means lower inflation. This means gold should be affected negatively since it’s usually considered a hedge against inflation.

On May 31, 2017, the implied volatilities of Royal Gold, Goldcorp, Agnico Eagle Mines, and Primero Mining stood at 26.5%, 30.7%, 32.1%, and 90.6%.

Goldcorp (GG), Yamana Gold (AUY), and Hecla Mining (HL) have fallen 4.1%, 15.7%, and 1.1% year-to-date, respectively. However, Gold Fields (GFI) has risen 14.6% year-to-date.

Now that we’ve considered analysts’ revenue estimates for the senior gold miners under review in this series, let’s take a look at analysts’ EBITDA estimates.

Iamgold (IAG) generated revenues of $277.4 million in Q2 2018, which represents a YoY (year-over-year) growth of 1.1%.

Among the senior gold miners (GDX), analysts are the most bullish on Newmont Mining (NEM), giving it 53% “buy” and 42% “hold” ratings.

Precious metals mining shares that have high correlations with gold include Royal Gold, GoldCorp, New Gold, and Newmont Mining.

Historically, Yamana Gold has lagged behind its peers. Due to its high financial leverage, it’s a higher beta play on gold compared to its peers.

For mining companies, 2016 brought a ray of hope. Gold had the best quarterly performance in 30 years and silver climbed to its 11-month high.

Physical buying from China and India should support the demand for gold. But a rate hike by the Fed could be the catalyst that could take gold down.

Gold touched a one-month low on Thursday, September 28, due to the rise of the US dollar over the speculation of another rate hike in December 2017.

After making discretionary cuts on exploration and capex for many years, gold miners (GDX) (JNUG) have started to refocus on production growth.

AISC (all-in sustaining costs) are an encompassing measure that helps compare miners’ performance—a vital metric for investors. They show the company’s margin cushion at prevailing gold prices (GLD)(IAU).

Even though precious metals miners have seen a remarkable rally in their prices, many fund managers have begun unloading their holdings in gold equities.

It’s important to keep an eye on labor conditions since they offer a look at the future direction of gold prices and ultimately gold-backed ETFs.

SLW and ABX saw YTD (year-to-date) losses of 2.8% and 0.83%, respectively, while GG has a YTD gain of 12%.

Among senior gold miners (GDX), Newmont Mining (NEM) has the second-highest forward enterprise value-to-EBITDA multiple of 8.1x.

After surging to multimonth highs, gold slowly retreated to its original level. Gold fell from its overnight high, and equity markets rebounded from their fall.

Gold continues to trade at its five-year low. It’s hovering in the range of $1,100–$1,150 per ounce. Gold futures on COMEX lost 5.90% on a YTD basis.

After the $5 billion stock market collapse in China, investors fled to gold. Even a third straight annual decline in prices has failed to make gold lusterless in China.

U.S. public debt is the amount owed by the federal government in terms of outstanding treasury securities. For September 2014, U.S. debt to GDP was 102.9%.

The average ratio of the NYSE Arca Gold Miners Index and the S&P 500 Index (SPY) is 0.18 compared to the ten-year average of 0.68.

In the fourth quarter, Newmont Mining (NEM) produced 1.44 million ounces—a rise of 8% YoY (year-over-year).

After significantly outperforming peers in 2017, Kinross Gold (KGC) has underperformed this year.

IAMGOLD (IAG) generated revenue of $244.8 million in the third quarter, a YoY (year-over-year) fall of 9%.

Coeur Mining (CDE) reported its second-quarter earnings on July 25 after the market closed. The company reported an EPS of $0.01.

In 2015, Goldcorp (GG) achieved record gold production of 3.5 million ounces. This is a solid 24% growth YoY. The company achieved its production guidance of 3.3–3.6 million ounces.

Barrick’s high financial leverage is a key investor concern. Resolving this could lead to rerating of Barrick stock, a positive for Barrick’s share price.

Gold remained in the neutral range of $1,313–$1,319 per ounce as Bank of Japan gave its verdict, keeping the benchmark interest rate unchanged at -0.1%.

Barrick Gold (ABX) generated FCF of -$172.0 million in Q2 2018, which broke its streak of 12 consecutive quarters of positive FCF.

Berenberg noted that recent developments at Barrick, in addition to its deleveraging and strong free cash flow generation, are positives for the stock.

Inflation hedge Investors tend to hold gold in their portfolios as insurance against inflation. When inflation is high, the value of paper currency, in terms of the goods and services it can buy, falls. As investors want something that doesn’t lose its value, gold usually has a direct relationship with inflation. Demand for gold increases as inflation […]

Goldcorp’s asset portfolio is located in politically stable, low-risk jurisdictions in the Americas. This is one of Goldcorp’s key advantages. Many gold miners are facing political instability and taxation issues.

Investors were somewhat pessimistic about gold during the last quarter of 2016. Most of the fluctuations were due to the news of the interest rate hike.

Tracking China and India’s inflation figures can give you insight into gold prices’ future direction. It also provides you a look into gold-backed exchange-traded funds (or ETFs) like the SPDR Gold Shares (GLD).

Barrick Gold (ABX), Goldcorp (GG), Newmont Mining (NEM), and Gold Fields (GFI) have declined 5.2%, 5.4%, 6.2%, and 2.8%, respectively.

As global tumult grips markets and investors turn to mining stocks as safe havens, it’s crucial to understand which stocks are closely tied to precious metals.

Goldcorp’s 4Q16 results beat market expectations mainly due to lower costs and higher gold prices.

After outperforming peers by a wide margin, Barrick Gold (ABX) has lagged behind so far in 2017.

Currently, 20 analysts are tracking Goldcorp (GG) stock. About 70% of them are recommending a “buy,” and 25% are recommending a “hold.”

Central bank policies can have a significant impact on gold price. Central banks are a large gold holder. They own ~30,500 tons of gold. This is close to 20% of the gold ever mined. As a result, their policies on gold sales, gold purchases, and other monetary policies can have a significant impact on gold price.

OPGSX may also invest up to one-fifth of its portfolio directly into gold or silver bullion and other precious metals.

Goldcorp (GG) has one of the strongest project pipelines in the industry. These projects underpin the company’s 20% growth in reserves by 2021.

Vanguard Precious Metal and Mining Investment Fund (VGPMX) lags in diversification, as it’s a pure sector fund.

On July 28, Yamana Gold (AUY) announced the recommissioning of C1 Santa Luz, a project located in Bahia, Brazil. It was put on care and maintenance in 2014.

Goldcorp continued with its lower cost trend, as the key cost metric AISC (all-in sustaining costs) fell 21% YoY and remained almost flat QoQ in 3Q15.

Wall Street analysts estimate revenue of $2.0 billion in 2Q16 for Barrick Gold (ABX), which is slightly higher than the $1.9 billion ABX earned in 1Q16.

According to Barclays (BCS), Goldcorp (GG) has the potential to provide nearly 30% upside from its closing price of $13.80 on June 23, 2017.

Money supply is the total amount of currency and other liquid instruments in circulation in an economy. Money supply data is usually collected and published by the country’s central bank.

Gold prices gained 1.71% YTD (year-to-date)—despite the US Dollar Index increasing by almost 9% YTD. Prices are in a long-term downtrend.

North American senior gold miners (RING) had a strong run in 2016, with an average gain of 72% in the group as a whole.

GDX has given a return of 60% YTD as of April 25, 2016, which is four times the return generated by the SPDR Gold Shares (GLD) in the same time period.

Gold is often touted as the safe-haven asset that investors embrace in times of economic and political uncertainty.

Gold April futures contracts are trading in a downward trending channel. Gold prices settled just above the key support on March 9, 2015.

Goldcorp stock has lost 4.7% year-to-date through the end of September, underperforming its close peers.

As a group, the average gains of North American senior gold miners (GDX) (RING) have been muted.

This series analyzes gold prices and market fundamentals. June gold futures trading on the COMEX slightly declined by 0.02% on May 22, 2015.

Gold doesn’t give any returns besides appreciation. Appreciation doesn’t always happen. As a result, gold has to compete against assets that yield something. When the return on the alternate assets begins to rise, the demand for gold falls. In a scenario where the real interest rates are rising continuously, the demand for gold—as an investment—will start falling.

For 1Q17, ABX reported adjusted EPS (earnings per share) of $0.14, which was lower than the consensus estimate of $0.20.

The Cortez mine is one of the largest and lowest-cost mines in the world, with huge upside exploration potential. It is Barrick’s largest-producing mine and contributes close to 15% of the total production.

Yamana Gold’s (AUY) valuation multiple has varied widely between 5.1x and 15.1x.

Wall Street analysts expect Goldcorp’s revenues to fall 2.3% to ~$3.4 billion in 2017.

Although 2017 has not been very good for Newmont Mining stock due to short-term issues, its outlook remains strong.

Senior gold miners are large miners with established positions. While there are variations between different miners, as a group, they usually follow gold prices.

As of July 28, 2016, Kinross Gold was trading at $5.03 per share. About 32% of Wall Street analysts covering the stock have issued “buy” recommendations.

According to the consensus compiled by Thomson Reuters, 22 analysts are currently covering Barrick Gold (ABX).

If the uncertainty in the Eurozone increases, gold may rally. On the other hand, a sooner-than-expected rate hike would likely push down non-yielding assets such as gold.

Goldcorp’s (GG) management has unveiled a plan to create value for the company over the next five years.

Citigroup’s (C) Alexander Hacking upgraded Barrick Gold to “neutral” from “sell” on August 28 and lowered its target price from $12 to $11.

Goldcorp’s gold production fell 16% YoY in 4Q16 to 761,000 ounces.

For 3Q16, Newmont Mining (NEM) reported AISC (all-in sustaining costs) of $925 per ounce, which is 5% higher YoY and 6% higher quarter-over-quarter.

On May 12, 2016, Goldcorp (GG) announced the acquisition of Kaminak Gold (KMKGF) for 520 million Canadian dollars in a share swap transaction.

Barrick Gold’s 60% share in 3Q14 production at Pueblo Viejo was 168,000 ounces, an increase of 49% from the year-ago level. The increase is because of the full ramp-up of the mine following modifications to the facilities.

Gold prices have gone through a rough patch recently with prices closing near their seven-month lows.

On August 2, 2017, Kinross Gold (KGC) achieved another earnings beat, reporting EPS of $0.04, beating earnings expectations by $0.02 for 2Q17.

Barrick Gold (ABX) produced ~1.43 million ounces of gold in 2Q17, which represents a growth of 7% on a year-over-year basis.

Debt to gross domestic product (or GDP) is the ratio that shows how much a country owes versus how much it earns. Investors use this ratio to measure a country’s ability to make future payments on its debt. This impacts the country’s borrowing costs and government bond yields.

Agreement on the Greek bailout extension sent gold reeling to under $1,200 per ounce. Highly indebted Greece now has four months to get its ducks in a row.

In the senior and intermediate gold miner space (GDX)(GDXJ), analysts are the most bullish on IAMGOLD (IAG), with 75.0% of analysts assigning it a “buy.”

Gold miners face the problem of compensating for every ounce they take out of the ground.

Barrick Gold has reiterated that strengthening its balance sheet is its top priority. The company achieved debt reduction of $2.0 billion in 2016.

Newmont Mining reported EPS of $0.33, which beat the consensus estimate by $0.14. Its revenue of $1.73 billion, however, missed the mark.

It’s expected that precious metal mining stocks will follow precious metals. So it’s crucial to know which stocks are closely associated with precious metals.

Newmont Mining (NEM), which started the gold miners’ 2Q17 earnings season on July 25, reported earnings per share of $0.46, soundly beating the consensus estimate of $0.26.

The Oppenheimer Gold & Special Minerals Fund – Class A (OPGSX) takes an alternative approach to investing in precious metals and related securities.

GDX consists of publicly-traded global companies. The companies are primarily involved in gold mining. It has assets worth $7.2 billion.

A record number of junior companies attended the Precious Metals Summit. We are finding companies with attractive development projects in North America and West Africa as well as some exciting discoveries that merit watching.

Gold is related to silver, oil, and copper. Relationships between commodities are examined to establish if one commodity’s price can fuel another commodity’s price. For example, it’s universally acknowledged that gold and silver prices are related. Silver’s price depends on gold’s price.

Kinross reported AISC of $988 per ounce in 2Q16, which is an improvement of 2.3% YoY (year-over-year) but is higher sequentially by 2.6%.

Barrick Gold (ABX) generated negative returns amounting to 9.7% year-to-date (or YTD) as of April 17.

In 2013, China passed India as the largest gold consumer. China’s private sector gold demand reached a record level of 1,132 tons in 2013. China’s middle class has been increasing. This supports gold demand. Recent research from the World Gold Council (or WGC) shows that there are 300 million people in China’s middle class. In just five years, China’s middle class is expected to grow to 500 million.