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  Title	Gold Miners: Winners And Losers At The Start Of Q4 2024
  ID	3015739
  External ID	7190861591
  Author	Unknown
  Published Date	Oct. 7, 2024, 4:29 a.m.
  Summary	Oct. 07, 2024 4:59 AM ET ABX:CA AEM AEM:CA AG AG:CA AGI AGI:CA ARIS:CA ARMN AU BTG BTO:CA BVN CDE CDM:CA DRD EDR:CA EGO ELD:CA EQX EQX:CA EXK FNV FNV:CA FSM FVI:CA GDX GFI GOLD HL HMY IAG IMG:CA K:C
  Tags	None
  URL	https://seekingalpha.com/article/4725360-gold-miners-winners-losers-at-start-q4-2024
  Sentiment	Negative: 0.02626    Neutral: 0.06434    Positive: 0.90940
  Relevance	0.01288

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  Content ID	1478994
  Key	c737792d-ae81-4fa3-8ea6-dec830a71bcf
  Content	Oct. 07, 2024 4:59 AM ET ABX:CA AEM AEM:CA AG AG:CA AGI AGI:CA ARIS:CA ARMN AU BTG BTO:CA BVN CDE CDM:CA DRD EDR:CA EGO ELD:CA EQX EQX:CA EXK FNV FNV:CA FSM FVI:CA GDX GFI GOLD HL HMY IAG IMG:CA K:CA KGC MAG MAG:CA NEM NGD NGD:CA NGT:CA OR OR:CA PAAS PAAS:CA RGL:CA RGLD SAND SIL:CA SILV SSL:CA SSRM SSRM:CA SVM SVM:CA WPM WPM:CA MarketGyrations 3.02K Follower s Follow Play 16min Summary Gold mining stocks rode higher on the back of record gold prices, but not everyone fared as well and some did rather poorly. Miners need more than just strong demand for gold, but it sure helps, and there is much that suggests gold demand will increase. GDX has trended higher, as have gold futures, which are likely to further strengthen the conviction that long GDX has its merits. A breather may be needed in Q4 after Q3, but miners as a whole should do well long-term as long as there is a fundamental need for more gold. Liudmila Chernetska Gold mining stocks continue to build on the rally that started earlier in the year. Miners generally trended higher in Q3 2024, although not in a straight line and with pullbacks. However, not all gold mining stocks gained as much and some actually declined in what was a strong quarter for gold and the companies engaged in extracting it. In addition, while corrections are to be expected, there is much that suggests gold miners have what it takes to keep going over the long haul. Why will be covered next. Gold and miners are on a roll There are many factors that affect how well the stock of a mining company will do. Higher gold prices are just one factor, although arguably the most important one over the long run, and they alone do not guarantee the stock of any particular gold mining company will perform well. At the same time, if gold prices keep dropping, gold mining companies will be hard-pressed to avoid the fallout. Source: Thinkorswim app Any discussion about gold mining stocks therefore ought to include the price of gold. Fortunately, prices for gold are better than ever, at least on a nominal basis. The chart above shows how futures reached a new high in September. In doing so, gold appreciated by almost half in one year. Gold went from a low of $1823 to a high of $2708. Furthermore, the lows and the highs are where they should ideally be, which is the lows to the far left and the highs to the far right. This shows how gold has moved higher in what looks like an uptrend, a bullish sign. Source: Thinkorswim app With gold flying high, miners have been pulled along. The chart above shows how the VanEck Gold Miners ETF ( GDX ), an ETF which tracks the performance of a selected group of companies involved in the gold mining industry, has moved higher in the last 12 months. Note the two ascending trendlines, which connect the higher lows and the higher highs. Who was hot and who was not The previous chart shows how GDX has picked up the pace in 2024. GDX gained 17% in Q3 2024 to push YTD gains to 28%. This was better than Q2 2024 and Q2 2024 was better than Q1 2024. However, not all of the companies represented in GDX managed as well. Some did better, but some did not and others fell somewhere in between. There are 59 stocks in GDX, but only 31 are listed on U.S. exchanges. The rest is listed on non-U.S. exchanges. The 31 stocks are Newmont Corp. ( NEM ), Agnico Eagle Mines ( AEM ), Barrick Gold ( GOLD ), Wheaton Precious Metals ( WPM ), Franco-Nevada Corp. ( FNV ), Gold Fields ( GFI ), Kinross Gold ( KGC ), AngloGold Ashanti ( AU ), Royal Gold ( RGLD ), Alamos Gold ( AGI ), Pan American Silver ( PAAS ), Harmony Gold Mining ( HMY ), Hecla Mining ( HL ), B2Gold ( BTG ), Eldorado Gold ( EGO ), Compañía de Minas Buenaventura ( BVN ), Osisko Gold Royalties ( OR ), IAMGOLD ( IAG ), Coeur Mining ( CDE ), Equinox Gold ( EQX ), New Gold ( NGD ), First Majestic Silver ( AG ), Sandstorm Gold ( SAND ), Fortuna Mining ( FSM ), MAG Silver Corp. ( MAG ), SilverCrest Metals ( SILV ), Gold Road Resources ( OTCPK:ELKMF SSR Mining ( SSRM ), Silvercorp Metals ( SVM ), Endeavour Silver ( EXK ), DRDGOLD ( DRD ) and Aris Mining ( ARMN Note that while GDX is supposed to be a gold mining ETF, a number of these companies do not just exploit gold, but also other metals like silver, copper and so on. The table below shows their gains and losses at the end of Q3 2024. Stock Weight % Change -12 months Change - 6 months Change - 3 months Change - 1 month Change YTD NEM AEM GOLD WPM FNV GFI KGC AU RGLD AGI PAAS HMY HL BTG EGO BVN OR IAG CDE EQX NGD AG SAND FSM MAG SILV SSRM SVM EXK DRD ARMN GDX Click to enlarge Source: VanEck , Thinkorswim, author GDX's gains YTD and TTM are respectable, but quite a few of its constituents managed to do even better. The top performer among the 31 names above is CDE with a gain of 213% TTM, followed by NGD with a 208% gain. YTD, CDE was also number one with a gain of 111%, followed by IAG with a gain of 107%. In contrast, the worst performer was SSRM with a loss of 57% TTM, worse than FNV with a 7.2% loss. These two were the only ones out of the 31 to end with losses. YTD, SSRM was again last with a loss of 47%, worse than BVN with a 9.2% loss. BTG and AG were the only other two with losses YTD. In Q3 2024, the top gainer was NGD with a gain of 48%, followed by IAG with a 43% gain. BNV was ranked last with a loss of 17%, worse than FSN with a 4% loss. These two were the only ones to finish in the red in what was a very good quarter for gold mining stocks in Q3 2024. EXK went into Q4 2024 with the most momentum after a gain of 27% in September, followed by NGD with a September gain of 16%. At the other end is AU with a 13% loss in September, worse than GOLD with a 2.1% September loss. Physical gold and gold miners are two different things The table shows how some miners can underperform or do poorly, even though gold prices are arguably better than ever. The gold price can go up, but this tailwind can be offset by headwinds elsewhere, which can cause the stock to decline. Miners can encounter various problems, and they can vary in nature. For instance, it is not uncommon for a mining company to become embroiled in a dispute with the local government, which has jurisdiction over the area where the mine is located and where the gold is extracted. Such disputes can happen everywhere, but they tend to be more likely in certain countries, which is why mine location is not to be ignored when picking stocks. This is what happened to the aforementioned GOLD, which is in a dispute with the government in Mali, a dispute which has seen the arrest of some employees. Another factor that can cause a miner to miss out on favorable prices is some disaster that causes a disruption to production. An example of this is SSRM, the worst performer mentioned earlier, which saw its stock collapse after a landslide in Turkey. There are other aspects to keep in mind when it comes to miners that do not apply in the case of physical gold, including the size and quality of gold reserves or the cost of extracting it and by extension the cash flow that can be generated. There is much more, but the gist of it is that physical gold and gold miners are not the same thing. Is GDX better than selected company stocks? No matter how strong prices are for gold, there is always the risk an investment in a gold mining company does not pan out. Higher gold prices certainly help, but by themselves do not guarantee a miner will be worth the investment. On the contrary, returns are not guaranteed and losses are possible, even with gold at record highs. Picking the right stock can make a huge difference, but even then, there is always the risk the investment does not work out. A smooth-running company can have huge reserves at the lowest AISC, but if the government is dissatisfied with the royalties it receives and therefore decides to nationalize the mine, its stock is going to get smacked no matter what. This is more so in the case of smaller miners, or junior miners because they do not have the cash flow to absorb a hit like this. It is said not to put all your eggs in one basket, and that is true in the case of gold mining stocks. ETFs are not perfect, and they have their own drawbacks, but they can be of help here. Investing in a basket of companies, whether as part of an ETF like GDX or composed of hand-picked stocks, can mitigate the risk of a stock not working out for whatever reason. Granted, ETFs will not offer the returns a single stock might. ETFs lower risk at the cost of lowering potential returns. Stock picking offers the potential for higher returns, but they come with greater risk. Both methods can work. A mix of both may be better. Are gold and miners likely to go higher? However, at the end of the day, the biggest swing factor for gold miners, especially as a group, is the price of gold. Higher gold prices can make life a lot easier for miners, and it can compensate for problems elsewhere. Conversely, lower gold prices can cause all sorts of problems, especially if say the gold price falls below AISC. Currently, the price of gold has been going up, as shown earlier. This has happened for a number of reasons. The flight to safety and U.S. dollar concerns are some of the contributing factors, but in general, demand for gold is up. More importantly, there is much that suggests this increase in demand is no temporary phenomenon, but here to stay. Demand for physical gold is much stronger than in previous years. Central bank buying of gold, for example, is much higher compared to only a few years ago. According to the World Gold Council, central bank gold demand reached a record 483t in H1 2024, breaking the old record of 460t in H1 2023. However, it is not just central banks turning to gold. The average consumer is also interested in gold, whether in bullion, jewelry, or whatever form, as a store of value that is relatively safe. The driver here can vary depending on the individual, but a major driver is because existing options are perceived as becoming more of a question mark. The default safe haven has for a long time been U.S. treasuries, a function of the U.S. dollar as the world's reserve currency. However, the latter is perceived as being debased as a currency for a number of reasons. Growing U.S. government debt and fiscal deficits play a role here. The former is closing in on a record $36 trillion and the latter has moved higher over the years to the point that it is expected to be the highest ever at around $2 trillion in FY2024, with the exception of FY2020-2021 during the COVID-19 years. This raises doubts as to whether U.S. government debt is as safe as assumed, which puts the central bank buying of gold in another perspective. Many central banks hold U.S. treasuries, but gold is seen as an alternative. Geopolitics is also a factor here, as the countries most concerned about the U.S. dollar or U.S. treasuries tend to be opponents of the U.S., like China and Russia. They are the ones pushing the hardest for a less dominant role for the U.S. dollar. In short, people want an alternative, and this is where gold comes in. This dynamic is unlikely to go away for the foreseeable future, which bodes well for gold demand and, by extension, those engaged in the business of extracting it. So an argument can be made that gold miners have a solid foundation to work with. Will there be an October surprise for gold? Gold and miners have done very well in Q3 2024, which puts the bar high for an encore in Q4 2024. Some sort of consolidation following the strong gains in Q3 2024 would not be out of place. However, another surge higher is not completely out of the question. It will not come easy, but a possible catalyst could come in late October when a group of nations come together as part of a BRICS meeting. This includes the aforementioned China and Russia, but also India, Brazil, South Africa and several other countries. BRICS countries are known to be interested in setting up alternative systems to established ones, including payment and settlement systems to conduct trade using currencies other than the U.S. dollar. What will be interesting to see is how BRICS countries intend to proceed with what amounts to an alternative to the SWIFT payment system, and whether a trading currency will be established along with it. The latter could involve the use of gold to back the new currency. It's probably not likely to happen at this stage, but if there is a mere mention that BRICS are looking at a bigger role for gold in the current global financial system, speculators could go on to bid up the price of gold. This is almost certain to pull the stocks of gold miners higher. Investor takeaways There may be exceptions, but most who were long gold mining stocks going into Q3 2024 are likely satisfied with the way Q3 2024 went. Most miners posted strong gains, backed by a gold price that reached record highs in the quarter. However, Q3 2024 is no more and the bar has been set high for an encore in Q4 2024. GDX, for example, gained 17% in the last quarter. This makes it unlikely mining stocks as a whole will do as well in Q4 2024 as they did in Q3 2024, although it is not impossible. What is more likely to happen is that mining stocks take a breather by consolidating the prior gains in the preceding quarter. Still, those who do not insist on a quick return can take solace from the fact that gold mining stocks have good prospects over the longer term. Gold miners need to keep track of much more than just the price of gold, but it sure makes everything a lot easier if prices are strong. If the price of gold is to increase, buyers need to show up in numbers to bid up the price of gold. Buyers are not going to bother unless they have a reason to. With the current state of the world, there are plenty of reasons to look at gold. It is not by accident that central banks are buying gold at a record pace. Mind you, central banks are tasked with taking care of a country's reserves, which means they need to have a level of trust that the reserves will be safe as can be using gold. Furthermore, gold demand is likely to increase. The need for safe havens is there with all the turmoil in the world. Gold is not the only safe haven to benefit in this environment, but it comes at a time when competing safe havens are receiving more skepticism than in the past. This includes U.S. treasuries, which have long been the go-to safe haven in times of crises. Treasuries are still on top, but there is a growing need for a viable alternative. There are multiple alternatives, each with their own set of pros and cons, but the best alternative available right now is arguably gold. Central banks seem to agree with this based on their buying of gold. If someone is bullish gold, then gold mining stocks are another option worth considering. Miners offer the potential for higher returns, although also at higher risk. Physical gold and miners are not the same, but if the former does well as expected, then the latter should as well as a whole. Just remember not to put all eggs in one basket. This article was written by MarketGyrations 3.02K Follower s Follow Welcome to my author's site. As an avid follower of SeekingAlpha, I take great interest in articles posted as the subject matter is often something that appeals to me. However, I will sometimes encounter an article that I might not agree with. My purpose is to present an alternative view to readers that they may want to take into account. I hope you find my articles interesting and informative. Show more Show more Analyst's Disclosure: I/we have a beneficial long position in the shares of GDX, EGO, IAG, EQX, BTG, KGC, NEM either through stock ownership, options, or other derivatives. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article. Seeking Alpha's Disclosure: Past performance is no guarantee of future results. No recommendation or advice is being given as to whether any investment is suitable for a particular investor. Any views or opinions expressed above may not reflect those of Seeking Alpha as a whole. Seeking Alpha is not a licensed securities dealer, broker or US investment adviser or investment bank. Our analysts are third party authors that include both professional investors and individual investors who may not be licensed or certified by any institute or regulatory body. 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