Is Now The Time To Own Underperforming Gold Mining Stocks? One Trend Is 'Likely To Reverse'
Portfolio Pulse from Neil Dennis
Gold has remained above $2,000 per ounce since November, nearing its record high. Despite this, gold miners have underperformed, with the VanEck Gold Miners ETF (GDX) losing 8% last year. However, recent World Gold Council data shows a surge in gold demand, particularly from central banks, which has led to a positive performance in gold stocks like Newmont Goldcorp (NEM), Kinross Gold (KGC), Barrick Gold (GOLD), and Harmony Gold Mining (HMY). The underperformance of gold miners compared to gold prices is attributed to rising mining costs and dilution from acquisitions, mergers, and capital raises. Yet, there's optimism that gold miners are now better managing costs, reducing debt, and improving cash flows, making them historically undervalued and poised for a potential reversal in trend.
February 01, 2024 | 8:36 pm
News sentiment analysis
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POSITIVE IMPACT
The VanEck Gold Miners ETF (GDX) gained 4.1%, reflecting optimism in the gold mining sector despite its 8% loss last year and further 3.3% loss in January.
The GDX's recent gain suggests a growing optimism towards gold miners' future, despite its past underperformance, hinting at a potential trend reversal as miners improve their financial health.
CONFIDENCE 85
IMPORTANCE 80
RELEVANCE 90
POSITIVE IMPACT
Barrick Gold gained 3%, reflecting the broader trend of increasing gold demand and potential for gold miners to reverse their underperformance.
Barrick Gold's recent gain is indicative of the positive impact of rising gold demand and the potential for gold miners to reverse their historical underperformance.
CONFIDENCE 75
IMPORTANCE 70
RELEVANCE 80
POSITIVE IMPACT
Harmony Gold Mining jumped 9%, significantly benefiting from the record high gold demand and improving sentiment towards gold miners.
Harmony Gold Mining's significant gain is driven by the record high gold demand and the improving sentiment towards gold miners' financial and operational improvements.
CONFIDENCE 80
IMPORTANCE 75
RELEVANCE 85
POSITIVE IMPACT
Kinross Gold was up 5%, benefiting from the recent increase in gold demand and positive market sentiment towards gold miners.
Kinross Gold's performance is positively impacted by the surge in gold demand and the market's optimistic outlook on gold miners' ability to manage costs and debt.
CONFIDENCE 75
IMPORTANCE 70
RELEVANCE 80
POSITIVE IMPACT
Newmont Goldcorp rose 3% amid a surge in gold demand and optimism for gold miners managing costs better.
The rise in gold demand and optimism around cost management could lead to improved investor sentiment and stock performance for Newmont Goldcorp in the short term.
CONFIDENCE 75
IMPORTANCE 70
RELEVANCE 80