SSgA SPDR Gold Shares

IAG stock could continue to gain traction due to its high operational leverage, at least as long as the upward trend in gold prices continues.

At 2:50 PM EDT on July 22, precious metal producers Barrick Gold (ABX), Newmont Mining (NEM), and Royal Gold (RGLD) gained ~1%, ~2.0% ,and ~0.77%, respectively.

Gold (IAU) (GLD) prices usually have a strong negative correlation with the US dollar (UUP). Gold, like other commodities, is denominated in the dollar.

IAMGOLD’s (IAG) 2Q17 production was 223,000 ounces of gold—growth of 26,000 ounces or 13% year-over-year (or YoY).

Gold prices plummeted on Wednesday, January 25, 2017, and gave the lowest close in recent weeks.

Gold and interest rates have a close inverse relationship. The higher the rate for Treasuries, the lower the demand for non-yield-bearing assets such as gold and silver.

At 6:05 AM EST on March 19, the West Texas Intermediate crude oil futures for May 2018 delivery were trading at $62.20 per barrel—a drop of 0.34%.

Central banks have been net buyers of gold since the beginning of the financial crisis of 2008.

Outflows from exchange-traded funds (or ETFs) led to an ~28% fall in gold prices in 2013. They sold a combined 881 tons of gold. Investors should monitor the change in ETF holdings.

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.

The CBOE Volatility Index suddenly rose 6.0% on November 9, 2016, after it was clear that Trump had unexpectedly clinched the election.

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

These economic concerns and monetary stimulus expectations have decreased the probability of an interest rate hike by the US Federal Reserve, and the chances of an interest rate hike in July dropped to zero.

So what should investors be doing today? While inflation may take another year or more to get going, it’s not too early to start implementing long-term inflation hedges.

Recent readings have shown that inflation has stabilized, which is a good thing, but signs of an imminent acceleration in inflation are still scant.

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.

Palladium has seen six out of seven down trading days as of January 12. The recent stock market slump in China, which caused global tumult, hurt palladium.

Copper is trading lower on Thursday. At 6:36 AM EST, the COMEX copper futures contract for July delivery was trading at $2.06—a decline of 1.1%.

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).

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.

Investments in the precious metals sector—including mining—substantially depend on the rate hike conundrum.

Lower ore grade increases the amount of waste stripping required—in order to extract some volume of ore—as a result of mining more tons of waste.

At 8:45 AM Eastern time, gold futures contracts for June delivery were trading at $1,298.75 per ounce, a gain of 0.23%. Silver was trading at $17.59 per ounce, a loss of 0.37%.

Precious metals often run in the opposite direction of stocks. Whenever the risk appetite of investors is high, stocks tend to perform well.

US crude oil prices (USO) (OIIL) fell by 2.2% in the week ended June 17, 2016. Crude oil closed at $47.98 per barrel on the same day.

At 2:40 PM EST on August 8, the COMEX gold futures contract for December delivery was trading at $1,341.35 per ounce—a drop of ~0.23%.

Donald Trump has been vociferous about cutting taxes. He intends to reduce the current seven tax brackets to three.

At 6:35 AM EST on October 7, the COMEX copper futures contract for December delivery was trading at $2.15 per pound—a fall of ~0.12%.

The market is anticipating the speech by the Federal Reserve chair, Janet Yellen, at the annual central bankers meeting to be held in Jackson Hole, Wyoming, on August 26.

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%.

Real interest rates are adjusted for inflation. As real interest rates rise, other investments usually become more attractive. This reduces the demand for gold and vice versa.

Although not considered safe haven assets, in the current context of high geopolitical risk and consequently volatility, investors could consider investing in sectors like energy and large cap companies.

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.

According to the median of 12 forecasts in a Bloomberg survey of analysts and traders, gold prices could reach as much as $1,424 per ounce by the end of the year.

Four days before the UK (EWU) decided to leave the European Union (VGK), Soros warned the markets of a “Black Friday” and a crash in the pound.

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.

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).

India imported gold worth $1.97 billion in June—a fall of 37% YoY (year-over-year). That’s quite low compared to a rise of 10.50% YoY in May.

As gold rose initially, the revival in the equity markets shadowed the precious metal. Silver maintained its gains. It’s used as an industrial metal.

China’s better-than-expected growth in real estate investments in April supported copper prices on Monday.

In Q3, billionaire investor Leon Cooperman’s top five holdings were Fiserv, Alphabet, United Continental, Chimera Investment, and Cigna.

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

The fraction of total gold output held by central banks around the world has continued to decrease over the last decade and a sharp reversal in this trend is unlikely.

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.

Billionaire investor and bond guru Jeffrey Gundlach also shared his view on bond yields in an interview with CNBC.

Many economists, like the Nobel Prize–winning Paul Krugman, believe that the Fed acted as a “white knight” in 2008, saving the global economy in the dire aftermath of the financial crisis.

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.

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 (GLD) recorded their first weekly gain last week after six weeks of continued losses. What changed?

When gold prices fell by 11% in 2015, GDX amplified that loss by returning -25%. In 2016, GDX amplified gold’s gains positively.

Newmont Mining Corporation (NEM) is the world’s second largest gold producer and the only gold company included in the S&P 500 Index.

Kinross Gold (KGC) produced 671,267 GEOs (gold equivalent ounces) in 2Q16, which represents a 1% YoY (year-over-year) rise but a sequential decrease of 2%.

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

On November 25, the SPDR S&P 500 ETF closed on a flat note ahead of the holiday. It closed at $209.3. The Energy Select Sector SPDR ETF fell by 0.81% on the day.

Eldorado Gold (EGO) is Canada’s second-largest gold mining company, whose price is trading at $2.22 per share as of January 28, 2016.

So far, Barrick Gold (GOLD) stock has been trading in a narrow range in the fourth quarter. The stock has risen almost 30% in 2019.

Barrick Gold (ABX) stock has fallen 30% year-to-date, and it has underperformed relative to its peers in the gold sector. This is mainly due to the firm’s high debt profile.

AngloGold Ashanti (AU) it is less exposed to South Africa than other South African miners. About 28% of its production comes from South Africa.

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.

After falling for two consecutive trading days, gold regained its strength on Wednesday, June 29, amid increasing concerns over the stability of the global markets.

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.

Silver has outperformed gold year-to-date (or YTD). The SPDR Gold Shares ETF (GLD) has risen 17% YTD, while the iShares Silver Trust ETF (SLV) has risen 24%.

Newmont’s gold all-in sustaining costs were 16% lower YoY. The company’s ongoing portfolio rationalization efforts should also lead to even leaner assets.

Crude oil prices regained strength last week amid a decline in crude oil inventory levels and expectations of an extension of the supply cut agreement.

COMEX-traded gold futures for June delivery fell marginally by 0.24% and closed at $1,190.30 per ounce on Wednesday, May 6, 2015. Gold prices were down.

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.

Kinross Gold had $2.5 billion in liquidity as of September 30, 2015, including $1 billion in cash and $1.5 billion in undrawn credit facilities.

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

The Fed rate hike expectation has been one of the biggest factors driving gold prices for some time. Interest rates have been near zero since 2008.

Last year was a volatile year for the gold market. Softer demand from China and India, coupled with Trump’s victory, had immensely affected the precious metal.

Gold price’s reversal this year has created opportunities in gold stocks. The SPDR Gold Shares ETF (GLD) had gained 11% year-to-date as of Friday.

The outlook for gold demand in India is expected to remain weak due to weaker monsoons and a lack of festivities. This puts pressure of the gold demand.

Gold miners in 2017 seem to be driven more by company-specific factors than by the direction of gold prices.

After years of cutting back on sustained capital expenditure, silver miners—like their gold mining peers—have started to refocus on production growth.

AngloGold’s net debt fell by 32% in 1H16 over 1H15, mostly due to the sale of its Cripple Creek & Victor mine to Newmont Mining for $820 million.

Rising correlation across asset classes is a sticky problem that investors face while investing in today’s markets.

COMEX-traded June gold futures fell marginally by 0.50% and closed at $1,183 per ounce on May 11. Gold prices traded almost flat—led by weak Asian demand.

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.

The gold mining industry is on a track to reverse its traditional method of mining to generate better shareholder returns.

Yamana Gold’s (AUY) valuation multiple has varied widely between 5.1x and 15.1x. Yamana Gold is now trading at a forward EV-to-EBITDA multiple of 5.1x.

At 6:30 AM EST on April 27, the West Texas Intermediate crude oil futures contract for June 2017 delivery was trading at $49.16 per barrel—a fall of ~0.93%.

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.

At 7:30 AM EST on April 25, the West Texas Intermediate crude oil futures contract for June 2017 delivery was trading at $49.26 per barrel—a gain of ~0.04%.

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.

Increasing uncertainty, geopolitical concerns, and overvalued markets are giving fodder to gold (GLD) bulls.

June gold futures trading on COMEX increased slightly by 0.01% on May 15, 2015, and settled at $1,225.30 per ounce. Gold prices rose for the fourth day.

Ray Dalio increased Bridgewater Associates’ stake in the SPDR Gold Shares (GLD) and the iShares Gold Trust ETF (IAU).

Kinross’s Phase 1 at Tasaist should increase mill throughput capacity from 8,000 to 12,000 tons per day, reduce operating costs, and increase production.

At 5:35 AM EST, the West Texas Intermediate crude oil futures contract for January 2017 delivery was trading at $47.91 per barrel—a rise of ~5.9%.

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.

Druckenmiller has sold the firm’s position in Barrick Gold, which shows that he might have a strong outlook on the equity market.

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.

US crude oil rose on November 18 due to the market’s belief that OPEC (Organization of the Petroleum Exporting Countries) members might cut their output.