|Bid||0.00 x 1000|
|Ask||0.00 x 1300|
|Day's Range||18.32 - 18.80|
|52 Week Range||18.15 - 25.58|
|PE Ratio (TTM)||N/A|
|Expense Ratio (net)||0.53%|
Like positions in the SPDR Gold Shares ETF (GLD), institutional holdings in the VanEck Vectors Gold Miners ETF (GDX) fell sequentially during the second quarter. We discussed in the previous article how gold prices fell in Q2 2018. While gold miners are usually a leveraged play on gold prices, they gained 1.5% on average in the second quarter as gold fell.
Precious metals miners plunged Wednesday with gold prices declining to a more than 18-month low as the U.S. dollar strengthened toward its highest level in over a year on contagion fears over the global market following the rout in the Turkish lira. Gold miner stocks and related ETFs were among the worst performers Wednesday, with the VanEck Vectors Gold Miners ETF (GDX) , the largest ETF dedicated to gold mining stocks, down 6.2%, its lowest level since late 2016. Comex gold futures slipped 1.4% to $1,184 per ounce Wednesday on concerns that the recent declines in the Turkish lira could foreshadow broad weakness in the emerging markets and global economy.
Goldcorp (GG) produced 571,000 ounces of gold in Q2 2018, a decline of ~10.0% year-over-year (or YoY). On the other hand, its Cerro Negro and Eleonore mine ramp-up partially offset the decline from the above-mentioned factors. The company should see weak production growth in the third quarter as well, as it has modified the production plan for lower mill throughput and mill acreage.
Iamgold’s (IAG) Rosebel mine is located in northeastern Suriname in South America. IAG owns 95% of Rosebel. In the second quarter, Rosebel’s attributable production fell 5% YoY (year-over-year) to 70,000 ounces. Lower production at the mine was mainly due to planned maintenance and an increase in hard rock blend.
Iamgold (IAG) reported its Q2 2018 results after the market closed on August 8. It reported EPS of $0.03, beating the consensus estimate by $0.02. Its revenues, however, missed the expectation, coming in at $277.4 million compared to the consensus of $301 million.
According to a Reuters poll of 35 analysts and traders, the average gold price (GLD(IAU) forecast for 2018 and 2019 is $1,301 and $1,325 per ounce, respectively. Heavy losses suffered by gold prices in the second quarter led most of the analysts to lower their price estimates for the precious metal.
The Federal Reserve’s tighter policy stance has also stalled gold’s rally. The Federal Reserve, the world’s major central bank, is raising rates in contrast to the rest of the world’s central banks, which are still following a loose monetary policy. For the week ended August 3, speculators were net long on the US dollar for the seventh straight week.
Kinross Gold (KGC) produced 602,049 gold equivalent ounces in Q2 2018, a 13% fall YoY (year-over-year). Higher production at Bald Mountain was partially offset by decline resulting from the above factors. In the Americas region, Bald Mountain’s production declined sequentially due to the timing of the ounces recovered from the heap leach pads.
Kinross Gold (KGC) released its Q2 2018 results after the market closed on August 1 and held the conference call the next day. Most of Kinross’s peers have already reported their Q2 2018 results. Barrick Gold (ABX), Goldcorp (GG), and Agnico Eagle Mines (AEM) missed their earnings estimates. Agnico Eagle Mines missed its earnings estimate by a wide margin and reported EPS of $0.01.
To receive further updates on this VanEck Vectors Gold Miners ETF (NYSEARCA:GDX) trade as well as an alert when it’s time to take profits, sign up for a risk-free trial of Power Options Weekly today. The trade war has now started to morph into somewhat of a currency war.
Free cash flow (or FCF) generation helps a business’s long-term prospects and helps generate shareholder value. Barrick Gold (ABX) has a strategy of value over volume, which prioritizes profitable production. The company defines value creation for shareholders in terms of FCF per share. Barrick Gold (ABX) generated FCF of -$172.0 million in the second quarter, which broke its streak of 12 consecutive quarters of positive FCF.
What Sent Yamana Gold’s Stock Up 10% after Its Earnings Release? Yamana Gold’s (AUY) valuation multiples, which represent how much investors are willing to pay for a stock based on analysts’ estimates, has ranged between 4.3x and 9.8x over the last five years. Yamana is currently trading at a forward EV1-to-EBITDA multiple of 5.4x.
What Sent Yamana Gold’s Stock Up 10% after Its Earnings Release? Yamana Gold (AUY) announced the ramp-up of commercial production at its newest mine, Cerro Moro, on June 26. Currently, the mill throughput rate at Cerro Moro is ~900 tons per day, which is 90% of its capacity. Its gold and silver recovery rates are 91% and 87%, respectively.
Yamana Gold (AUY) released its Q2 2018 results after the market closed on July 26 and held a conference call the next day. Its EPS of $0.20 and revenue of $431.5 million were in line with market expectations. While its earnings didn’t surprise investors, the company’s production was higher than expected, boosting its stock by a whopping 10.1% on July 27.
Production growth is a crucial variable for miners. Barrick Gold (ABX) produced ~1.07 million ounces of gold in the second quarter, which reflects a decline of ~25.0% YoY (year-over-year). Barrick Gold (ABX) has maintained its production guidance of 4.5 million–5.0 million ounces of gold in 2018.
Barrick Gold (ABX) reported its second-quarter earnings on July 25 after the market closed and held its conference call the next day. The company reported adjusted EPS of $0.07, which missed analysts’ expectations by $0.04.
Barrick Gold (ABX) reported its Q2 2018 earnings yesterday after the market closed. The company reported adjusted EPS of $0.07, which missed analysts’ expectations by $0.04. Its revenues amounted to $1.71 billion, which missed expectations by 6.0%. The results stood in contrast to the company’s Q1 2018 earnings beat. The stock’s momentum in after-hours trading was weak after the miss.
Newmont Mining (NEM) reported its Q2 2018 earnings on July 26 before the market opened. The company reported earnings per share (or EPS) of $0.26, which beat the consensus expectations by $0.02. Its revenues of $1.66 billion, however, missed expectations by 7%. The miner beat Q1 2018 estimates.
Goldcorp (GG) reported its Q2 2018 earnings on July 25 after the market closed. Goldcorp along with Barrick Gold (ABX), Agnico Eagle Mines (AEM), and New Gold (NGD) kickstarted the gold sector’s (GDX) earnings season yesterday. The company’s revenues and earnings came in below consensus expectations.
Agnico Eagle Mines (AEM) reported its second-quarter earnings on July 25 after the market closed. The company missed analysts’ consensus estimate of $0.08. Agnico Eagle Mines’ peers (GDX) including Barrick Gold (ABX), Goldcorp (GG), and New Gold’s (NGD) earnings missed the estimates in the second quarter. Agnico Eagle Mines’ revenues of $556 million were slightly ahead of the consensus expectations of $544 million.
What Could Drive Investors’ Attention Back to Gold? Gold equity valuations are attractive, yet few investors are interested in gold stocks in the current environment. In order to attract investors in the next cycle, we feel companies must show that all of these changes are fundamental and lasting, rather than window dressing to cope with low gold prices.
What Could Drive Investors’ Attention Back to Gold? The chart shows that the return on invested capital (ROIC) for senior gold companies fell below industry peers from 2012 to 2015. A number of factors have contributed to the gold industry’s turnaround.
What Could Drive Investors’ Attention Back to Gold? The gold price has shown weakness ahead of every Fed rate increase since the hiking cycle started in December 2015. Gold has also rallied immediately after every rate increase, except for two.
Finally, the Fed raised rates for the second time this year on June 13 and upped its guidance to four rate increases in 2018. This lent additional strength to the U.S. dollar, putting pressure on gold. During June, gold fell $45.35 (3.5%), ending the month near its low for the year at $1,253.17 per ounce. Gold stocks outperformed gold in June, as the NYSE Arca Gold Miners Index (GDMNTR)2 and the MVIS Global Junior Gold Miners Index (MVGDXJTR)3 both fell 0.2%.
What Could Drive Investors’ Attention Back to Gold? Gold was also caught in the June metals selloff. Copper and zinc suffered sharp falls amid concerns that the Trump administration’s tariff policies will likely dampen demand.