|Bid||18.34 x 1000|
|Ask||18.60 x 1800|
|Day's Range||18.21 - 18.46|
|52 Week Range||17.28 - 24.86|
|PE Ratio (TTM)||N/A|
|Expense Ratio (net)||0.53%|
Precious metals miners ETFs surged Wednesday as gold strengthening on a weaker U.S. dollar and after Australian miners struck the "mother lode" of gold. The SPDR Gold Shares (GLD) rose 0.9% as Comex gold futures were 0.9% higher to $1,213 per ounce. A mine in Western Australia struck gold, uncovering around $11.5 million worth, NPR reports.
Year-to-date, the UUP ETF (UUP) has risen 5.2%, while the SPDR Gold Shares ETF (GLD) has declined 8.4%. According to a Reuters poll, while the US dollar could hold onto its gains for the rest of this year, it’s unlikely to maintain its ascent after that. Other factors supporting the dollar such as rate hikes and trade tensions have now been priced into the dollar. Morgan Stanley analysts also believe that the US dollar is “topping out,” according to Bloomberg.
The SPDR Gold Shares (NYSEArca: GLD) slipped for a fifth straight month in August and is down more than 8% year-to-date, but some market observers believe gold can cobble together some upside as autumn arrive. Investors have been shunning physical assets like gold in face of further interest rate tightening out of the Federal Reserve amid a robust U.S. economy. Fed Chairman Jerome Powell said earlier in August that gradual rate hikes will come, and with inflation still low, there was little concern over the economy overheating.
Citigroup (C) analyst Alexander Hacking upgraded Barrick Gold to “neutral” from “sell” on August 28. As reported by The Fly, Hacking mentions that he finds Barrick compelling, as its stock price has fallen ~30% in 2018. The target price for Agnico Eagles Mines (AEM) was reduced from $45 to $38, Goldcorp (GG) was reduced from $16 to $14, and Newmont Mining (NEM) was reduced from $42 to $36.
Gold (GLD) recorded its first weekly gain last week after six weeks of continued losses. The fall in the US dollar was the major reason for gold’s rise.
The SPDR Gold Trust ETF (GLD) has fallen ~8.0% year-to-date and ~11.0% from its April peak. The overall sentiment for gold remains quite bearish right now. Plus, it is also a seasonally weaker period for the precious metal, which could give investors an opportunity to buy gold at low levels and hold it as a hedge against economic uncertainty.
In the second quarter of 2018, the US economy grew at an annual pace of 4.1%, which marked a four-year high. However, as per a Reuters poll of economists, US economic growth will slow steadily over the coming few quarters. According to a Reuters poll of over 100 economists between August 13 and August 21, the boost that tax cuts gave to the US economy will likely wane.
According to David Rosenberg, the chief economist of Gluskin Sheff, 14 economic reports in August thus far have missed expectations. Among those that have missed the expectations are home sales and Markit PMI (purchasing managers’ index). Rosenberg said in a tweet, “Here we have nearly 3 misses for every beat, and yet the bullish chatter on the economy shows no signs of abating.
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. While the valuations of broader equities have continued to increase, the valuations of gold stocks haven’t kept the pace, and the ratio has fallen. In this article, we’ll see how individual gold miners look based on their valuations and compared to their histories and their peers.
Moving averages help traders and investors make market entry or exit decisions. Usually, if a stock is trading below its moving averages, it indicates that the stock is oversold, and vice versa. As we can see in the above table, all the gold miners we’re reviewing in this series are trading at discounts to their 50-day and 20-day moving averages based on their closing prices on August 17.
Now that we’ve considered analysts’ revenue estimates for the senior gold miners under review (GDX) in this series, let’s take a look at analysts’ EBITDA estimates.
In the previous article, we looked at analysts’ ratings for senior gold mining companies. In this article, we’ll look at analysts’ estimates for those companies’ (GDX) (JNUG) revenues going forward.
In this article, we’ll look at the market sentiments for these companies. We’ll look at analysts’ recommendations, target prices, and potential upsides or downsides for these gold miners.
FCF (free cash flow) generation is important for gold mining companies (SGDM) (GDX). This excess cash helps miners optimize their financial leverages, invest in projects that can drive long-term value, and provide shareholder returns.
Gold and gold miner related ETFs plunged Thursday as trade talks and a rising rate outlook helped bolster the U.S. dollar. The SPDR Gold Shares (NYSEArca: GLD) fell 0.9% Thursday as Comex gold futures ...
To a point, companies try to optimize their debt-to-equity mixes. In fact, it isn’t always bad to carry debt if a company can repay it through earnings.
One way to assess a company’s liquidity is to calculate its current ratio. Newmont Mining (NEM) and Kinross Gold (KGC) are doing the best among senior miners with ratios of 4.6x and 3.7x, respectively. Goldcorp (GG) and Yamana Gold (AUY), on the other hand, have the lowest current ratios of 1.01x and 1.04x, respectively.
As precious metals prices started weakening, investors shifted their focus from high-leverage miners (GDX) (GDXJ) to low-leverage miners with sound growth plans, leading miners to trim their balance sheets. Newmont Mining’s (NEM) net debt at the end of the second quarter was ~$1 billion compared to $1.9 billion at the end of 2016. The improvement was due to its EBITDA improvement and net debt reduction.
After making discretionary cuts on exploration and capex for many years, gold miners (GDX) (JNUG) have started to refocus on production growth. Newmont Mining (NEM) has approved eight projects since mid-2014. It’s also still on track to reach commercial production at Subika Underground in the fourth quarter.
What Could Drive Newmont Mining Stock in the Rest of 2018? Newmont Mining (NEM) has a forward EV-to-EBITDA multiple of 7.6x, which is the highest among the senior gold miners. Senior miners Kinross Gold (KGC), Barrick Gold (ABX), and Goldcorp (GG) are trading at forward multiples of 3.7x, 5.5x, and 6.3x, respectively.
Goldcorp (GG) produced 571,000 ounces of gold in the second quarter, a fall of ~10.0% YoY (year-over-year). Barrick Gold (ABX) produced ~1.07 million ounces of gold in the second quarter, reflecting a fall of ~25.0% YoY. Part of Barrick Gold’s lower production was expected due to lower ore grades, recovery at the Barrick Nevada oxide mill, and scheduled maintenance shutdowns at the Barrick Nevada and Pueblo Viejo autoclaves.
Among the gold miners (RING) (GDX) we’re discussing in this series, only Newmont Mining (NEM) beat analysts’ expectations in the second quarter. Stock reactions to the companies’ beats and misses and the extent of gold’s beats and misses varied among miners.
Gold prices haven’t been able to catch a break even as geopolitical concerns have become more pronounced. On August 15, gold prices fell to a 19-month low of $1,173 per ounce as the US dollar continued its winning streak. The precious metal appears to have lost some of its safe-haven appeal.
What Could Drive Newmont Mining Stock in the Rest of 2018? Investors are usually interested in the company’s FCF (free cash flow) progression, as it enables miners (GDX)(RING) to optimize their financial leverage, invest in projects supporting long-term value, and provide shareholder returns. In this context, we’ll look at Newmont Mining’s (NEM) FCF generation in 2018 and its future capability to generate cash.
Newmont Mining (NEM) saw its debt rise at the peak of the cycle due to expensive acquisitions. These companies are now focusing on steadily paying off their debt.