Which Gold Mining Stocks Could Have Upside Potential in 2018?
Gold versus gold miners
Gold prices have been volatile so far in 2018. After rising 2.5% in January 2018, gold fell 2.1% in February 2018. The stronger US dollar due to the hawkish Federal Reserve marred gold’s appeal.
Gold prices have, however, been finding fresh support in March 2018 due to fears of a global trade war after the Trump administration’s imposition of tariffs on imported steel and aluminum.
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YTD (year-to-date), gold prices (GLD) have risen 1.2% as of March 5, 2018, while the VanEck Vectors Gold Miners ETF (GDX) has returned -6.8%. Gold miners haven’t strictly followed gold prices. YTD in 2018, gold miners have been affected more by company-specific factors than by gold’s price movements.
Gold miners’ performances
The year 2018 hasn’t started out as a great one for gold miners. After rising 8.4% on average in 2017, the senior gold miners group has fallen 8.5% YTD as of March 5, 2018. The group has also underperformed the VanEck Vectors Gold Miners ETF (GDX) and the SPDR Gold Shares ETF (GLD), which have returned -6.8% and 1.2% YTD, respectively.
As you might expect, there are huge variances in individual senior gold miners’ performances. On the one hand, Newmont Mining (NEM) has risen 2.0% YTD, and on the other hand, Barrick Gold (ABX) and Kinross Gold (KGC) have fallen 19.6% and 16.2%, respectively, YTD. Goldcorp’s (GG) stock performance has been relatively flat during the same period.
The 4Q17 earnings season for major senior gold miners is now over. In this series, we’ll take a look at how these miners performed in the quarter. We’ll try to decipher which senior miners fared best in terms of costs, production, guidance changes, and debt management. We’ll also discuss how these miners are expected to progress going forward. We’ll conclude the series by summarizing analysts’ sentiments and the relative valuations of these stocks.
Let’s start things off by discussing which gold miners missed market expectations, which beat expectations, and why.