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Kinda a small rally in miners for such a big move in gold. They are oversold. Who knows i have a feeling a crash is coming may take miners down with general market a little more
Gold Stocks Languishing
By: Adam Hamilton | March 1, 2024
The gold miners’ stocks continue languishing seriously out of favor, grinding along near deep lows. This is a major anomaly given this sector’s bullish backdrop. Consolidating just under record territory, gold’s high prevailing prices are fueling fat profits for its miners. Many gold stocks are incredibly undervalued and massively oversold, phenomenal bargains. So they are overdue to mean revert way higher for big gains.
Virtually no one is interested in gold stocks today, speculators and investors alike have forgotten about this high-potential contrarian sector. The main reason is the extreme euphoria spewing out of this latest general-stock-market bubble. The greedy rush to chase AI stocks has overshadowed almost everything else. But that mega-cap-tech stampede has forced the S&P 500’s price-to-earnings ratio to a bubble 31.6x!
The ringleader for this popular speculative mania is AI-chip market-darling NVIDIA. It did just report a spectacular quarter, but is still trading at extreme valuations of 65.6x and 32.1x trailing-twelve-month earnings and sales! NVDA stock has skyrocketed parabolic, stretching an astounding 67% above its 200-day moving average! While vertical blowoffs always end badly, retail investors are aggressively buying high.
Last weekend my family attended three big parties Friday, Saturday, and Sunday, season-end bashes for my kids’ competitive basketball teams. NVIDIA was the main topic of conservation at all, coming up again and again. Dozens of parents who aren’t stock-market people were eagerly discussing how they had just deployed a bunch of money in soaring NVDA or soon would! This AI bubble has captivated the mainstream.
But once any parabolic mania bubble stock sucks in all available near-term buyers, crashes inevitably follow. NVDA rocketed vertical in late 2021 too, on extreme hype for cryptocurrency mining using its graphics chips. The bubble-valued S&P 500 rolled over into a fairly-mild bear in 2022, falling just 25.4% from January to October. Yet in roughly that same span, market-darling NVDA plummeted a catastrophic 66.4%!
Markets are forever cyclical, rising and falling. Bubbles inflate then pop, and sectors flow and ebb into and out of favor. Hot sectors collapse, and neglected sectors soar. So the days are definitely numbered for these extreme market anomalies of this AI bubble and gold stocks languishing. Big mean reversions are coming on major shifts in capital allocations. That will almost certainly really boost gold and gold stocks.
Gold stocks are normally leveraged plays on their metal, which overwhelmingly drives their profits and ultimately stock prices. Gold is actually faring really well, which is impressive overshadowed by a stock bubble. This gold bull’s latest upleg powered 14.2% higher between early October to late December, achieving two new nominal record closes. At worst since then, gold has merely suffered a mild 4.2% pullback.
Mid-week at $2,033, gold’s young upleg is still up 11.7% and gold is just 2.2% under nominal-record territory. Quarter-to-date, gold’s average price is running $2,027 which is the highest ever witnessed. The gold miners are earning fat profits hand over fist with these high prevailing gold prices, which their stocks will eventually reflect. Yet the leading GDX gold-stock index is trading as if none of this exists.
Back in early October when gold plunged near $1,820 birthing today’s upleg, GDX plummeted as low as $25.91 on close. The major gold stocks comprising it were extremely oversold, with GDX trading at under 85% of its 200dma. That was a perfect setup for gold stocks to mean revert sharply higher with gold’s new upleg. That indeed started happening into late December, with GDX surging 23.5% to $32.01 then.
But that only made for 1.7x upside leverage to gold, and historically GDX has amplified major gold moves by 2x to 3x. So the gold stocks were lagging, but not languishing. Gold-stock gains tend to accelerate later in gold uplegs, when traders’ excitement mounts. That’s kind of like NVIDIA shooting parabolic in this AI stock bubble’s terminal blowoff. The higher and faster stocks climb, the more traders rush to chase them.
Gold uplegs take two steps forward before one step back, in the form of pullbacks to rebalance sentiment. Those bleed off excessive greed, extending uplegs’ longevity. Gold retreated in most of January and early February, driven lower by gold-futures selling in response to a US dollar bear rally. Though that futures selling was intense, and gold too was overshadowed by the stock bubble, the resulting pullback was mild.
Again gold only slumped 4.2% at worst to $1,991 in mid-February. That was nowhere near enough to spawn meaningful fear, but it did anyway. Gold stocks remained so out of favor that GDX plunged a way-outsized 19.1% during that gold pullback! That made for excessive 4.6x downside leverage to gold, much larger than normal. Gold-stock traders freaking out for no reason pounded GDX way back down to $25.89.
That was a hair under early-October levels when gold was trading near $1,820. So gold stocks’ entire upleg had been erased, despite gold holding 9.4% higher at its low! This serious disconnect is a huge anomaly that isn’t sustainable. This GDX chart of recent years highlights the absurdity of gold-stock pricing today. Gold stocks are languishing at levels last seen in early November 2022 when gold was $1,675!
Gold stocks’ recent pounding is highly illogical, driven by irrational and unsustainable fear. Seeing gold stocks so darned low relative to high prevailing gold prices is an anti-bubble, the opposite of NVIDIA’s hyper-overbought moonshot. Gold-stock technicals have been battered to oversold extremes, with GDX bashed down to just 88% of its 200dma mid-week! Traders are overwhelmingly bearish on gold stocks.
Being in the financial-newsletter business, I’m blessed with lots of feedback. I’m grateful for it, thinking of the Proverbs Bible verse “As iron sharpens iron, so one person sharpens another.” And after a quarter-century writing our newsletters, definite feedback patterns are apparent. Traders grow very excited about gold stocks when they are high late in major uplegs, then despise them when they are low after big selloffs.
The overall tenor of incoming e-mails has long proven a great indicator of gold-stock sentiment. Lately it has been utterly miserable, with a high proportion of feedback along the gold-stocks-are-dead-you’re-a-fool theme. Speculators and investors alike have totally capitulated on this sector, convinced it is doomed to spiral ever lower indefinitely. Only at major gold-stock bottomings before big uplegs is bearishness so shrill...
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$GDX - Update. Getting a turn from that Lwr-Line of 'Coil'...
By: Sahara | March 1, 2024
• $GDX - Update.
Getting a turn from that Lwr-Line of 'Coil'...
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What do they say- Its so bad that it’s good.
Yea money supply was crashing until they bailed out the banks that hurt gold but now its just pure futures manipulation by the "presidents working group in financial markets" naked short selling and Commercial Banks shorting as well imho
This guy nailed it.
Matthew Piepenburg, partner at Matterhorn Asset Management: It’s almost comical to watch policy makers of all stripes and country codes caught in a corner yet pretending we don’t notice.
Children In Charge
I’m reminded of the kid with his hand in the cookie jar while pretending his parents can’t see him—denying his guilt despite the crumbs falling from his face.
Again: It’s almost comical.
But there’s really nothing funny at all about major economies crawling into recession (Germany, Japan, UK, China) or denying recession (USA) while our mental midgets from DC to the EU play with bonds, inflation currency and war like kindergarteners with gas and matches.
Can’t Hide the Debt Cookie Crumbs
Speaking of kids caught with crumbs on their face while denying responsibility, it seems that even our central bankers can’t keep hiding the facts of now “unsustainable debt” (Powell) with clever lies, such as they had tried to do in the past:
In short, the days of hiding bad math behind empty words are now coming to an end, as most recently evidenced by another comical treasury market auction (below).
Keep It Simple: Debt & Bonds
As we’ve repeated ad nauseum, “the bond market is the thing,” and its survival, like a diesel V8 engine, lives and dies on liquidity/grease—i.e. dollars.
After trillions in outright grotesque QE grease following the bond crisis of 2020 and a hidden TBTF bank bailout (disguised as pandemic relief), the combined efforts of the Fed and Treasury Dept (i.e., the yin and yang of Powell and Yellen) to provide backdoor liquidity to this thirsty market are both tragic and remarkable.
Despite Powell’s headline tightening since 2022, the level of direct Fed liquidity is still tens of billions per month, and the hundreds of billions provisionally drawn from the reverse repo markets, the Treasury General Account (TGA), the Bank Term Funding Program (BTFP) are just QE by another pathway.
In addition to these tricks, tack on Yellen’s desperate attempt to issue trillions from the short end of the yield curve to take supply (and price) pressure off the sacred U.S. 10-Year, we can trace more examples of open desperation and backdoor liquidity by another name.
But at some point, all these liquidity tricks (as well as liquidity) run dry…
NEM went to 14 bucks less than a decade ago.
NEM went to 14 bucks less than a decade ago.
NEM went to 14 bucks less than a decade ago.
the whole sector should collapse on NEM's earnings, or lack thereof and thank heavens I sold. In the mining sector, as doug casey remarked a long time ago, ..most of the times you will lose money and a lot of it, on the other hand there are those unusual times which don't come along very often, where you can triple your money.....unfortunately this is not one of those times. Great Article by a smart guy who knows the sector right here.
https://seekingalpha.com/article/4671302-gdx-more-pain-in-store-for-beaten-down-gold-miners
GDX: More Pain In Store For Beaten Down Gold Miners
Feb. 18, 2024 11:25 PM ETVanEck Gold Miners ETF (GDX)NEM, GOLD, RING, ABX:CA, NGT:CA38 Comments
Stuart Allsopp profile picture
Stuart Allsopp
6.07K Followers
Summary
VanEck Gold Miners ETF is trading at multi-year lows relative to gold, but this merely reflects the ongoing deterioration in the sector's fundamentals.
Declining profits and free cash flows, along with deteriorating balance sheets, are contributing to the sector's challenges, with dividends set to be slashed.
Weak fundamentals leave gold miners highly susceptible to falling gold prices, with previous cash crunches resulting in the GDX trading below book value, which is still 30% below current valuations.
Construction Workers Inspecting Site
SeventyFour
The VanEck Gold Miners ETF (NYSEARCA:GDX) is trading at multi-year lows relative to gold, but there may still be pain ahead for the sector as free cash flows remain under pressure and balance sheets continue to deteriorate. Since my last update on the ETF in June last year, the slight increase in gold prices has failed to arrest the ongoing decline in profits and free cash flows, and the market remains highly susceptible to a crisis of confidence. The latest decline in gold prices amid fading hopes of early rate cuts is a warning sign for GDX investors, and a further decline in the metal could easily result in a 30% decline in the ETF.
The GDX ETF
The GDX is the largest gold mining ETF, tracking the performance of the NYSE Arca Gold Mining Index. Newmont (NEM) has the largest weighting on the index which has risen to 13.2% from 10.2% in June despite its underperformance since then as share issuance has risen. Barrick Gold (GOLD), the second-largest stock, has seen its weighting remain broadly unchanged at 8.8%. GDX's main competitor in the large-cap gold space is the iShares MSCI Global Gold Miners ETF (RING), with the main difference being the latter's higher concentration of NEM and GOLD, which make up a combined 32% of the index vs. 23 for GDX. This comes at the expense of a slightly higher expense fee, which is 0.51% for the GDX versus 0.39% for RING. It also results in the GDX having a lower dividend yield of 1.8% versus 2.3% as NEM offers a significantly higher yield than the other stocks in the index, with a 4.8% yield. As explained below, dividend payouts look set to fall significantly over the coming months.
Price Declines Reflect Ongoing Fundamental Deterioration
After continuing to decline despite robust gold prices, one might expect the GDX to be trading at discounted valuations, but the sector still cannot seem to translate high gold prices into sales, earnings and free cash flows. The chart below shows the gold price alongside various sales and earnings estimates rebased to three years ago. The most concerning is the ongoing decline in free cash flows, which have fallen over 80% over this period. As a result, the GDX trades at 58x forward free cash flow estimates.
Chart
Gold Price Vs GDX Sales And Earnings (Bloomberg)
Forward free cash flows are now below trailing dividend payments, which makes further dividend cuts all but certain. They have already declined by 14% on a per-share basis since their peak in early 2022, and it would not be surprising to see a repeat of the aggressive cuts seen during the 2013-2016 period as management looks to shore up balance sheets once again in response to declining net cash positions. The index's net cash position has been in decline since 2021, with debt once again rising and cash and short-term investments in decline.
Chart
GDX Dividends Per Share And FCF Per Share (Bloomberg)
A Fall To Book Value Would Require A 30% Decline
If gold miners have performed poorly in a gold bull market, it is worth thinking about what could be in store if gold prices undergo a meaningful correction. The increasingly precarious cash positions in the gold mining sector could cause panic selling in the GDX in response to a drop in gold, as we have seen on previous occasions, most notably in 2008 and 2013. During these gold price declines, the GDX price to book value briefly traded below 1x as investor focus shifted from return on capital to return on capital. From 1.4x at present, a decline in book value would result in a loss of almost 30%.
Chart
GDX PB Ratio Vs Free Cash Flows (Bloomberg)
Upside Risks Cannot Be Ignored, But Gold Would Need To Move Much Higher
The main risk to my bearish thesis comes from renewed upside momentum in gold. Despite the GDX's long-term underperformance, it still has a track record of outperforming gold during periods of strong gold price gains. If gold were to rise by 10% and this translated directly into a 10% increase in sales, at current margins, free cash flows would triple, bringing the free cash flow yield back up to 6%, which is where it was at the 2021 peak. That said, such a move in gold prices at current high real interest rates is highly unlikely, and even if it were to occur we would also likely see mining sector costs rise. On balance, the risks remain heavily skewed to the downside.
The Gold majors *(let alone the small fries), remind me of my biggest score ever, U.S. steel, which was hated and despised, left for dead. Goldman sachs assigned a biotech korean analysist to track it and she issued a sell recommendation when it was 21, driving it for a couple days to below 19. I couldn't believe it....18 months later it was 52. It has now been bought out by a japanes company for almost 49 bucks, but the higher offer, from steelmaker Cleveland Cliffs is still on the table.
Looks at irrational price movements as an opportunity to simply load up and wait. NEM for instance, make well over 400 million in cash for every 100 dollars increase in the gold price, and it is also ramping production to add almost 400 million more ounces per annum very soon. I expect in 2 to 3 years NEM to be producing 8 million or so gold ounces (let alone massive copper and even silver). The stock like all the majors is wildly undervalued, as U.S steel was for 3 to 5 years.....
We are looking at a case of the market simply disbelieving in gold mining, despite the rise in the price, its certainty of moving much much higher in the next several years, all of that high priced gold falling to the bottom line at NEM and others. Pure profit, ..the divi is now almost 5 percent. When Gold is at 3000 POG, which is a certainty, ...NEM will be 150 bucks and kicking out a 6.5 percent divi and the generalist funds will be believers and buying like mad hatters................Just like U.S. steel that they despised but then, the profits simply overwhelmed Wall street and forced them to believe and buy. NEM is at the very bottom of an incredible price quadruple and so are some of the others. It is all about massive production ounces and leverage, with basically fixed costs, to a commodity that must skyrocket and will.
The Gold majors *(let alone the small fries), remind me of my biggest score ever, U.S. steel, which was hated and despised, left for dead. Goldman sachs assigned a biotech korean analysist to track it and she issued a sell recommendation when it was 21, driving it for a couple days to below 19. I couldn't believe it....18 months later it was 52. It has now been bought out by a japanes company for almost 49 bucks, but the higher offer, from steelmaker Cleveland Cliffs is still on the table.
Looks art irrational price movements as an opportunity to simply load up and wait. NEM for instance, make well over 400 million in cash for every 100 dollars increase in the gold price, and it is also ramping production to add almost 400 million more ounces per annum very soon. I expect in 2 to 3 years NEM to be producing 8 million or so gold ounces (let alone massive copper and even silver). The stock like all the majors is wildly undervalued, as U.S steel was for 3 to 5 years.....
We are looking at a case of the market simply disbelieving in gold mining, despite the rise in the price, its certainty of moving much much higher in the next several years, all of that high priced gold falling to the bottom line at NEM and others. Pure profit, ..the divi is now almost 5 percent. When Gold is at 3000 POG, which is a certainty, ...NEM will be 130 bucks and kicking out a 6.5 percent divi and the generalist funds will be believers and buying like mad hatters................Just like U.S. steel that they despised but then, the profits simply overwhelmed Wall street and forced them to believe and buy
This chart will be history repeating itself, Naz has the originators of the bubble, the feds words will come true again "irrational exuberance" has taken on a global meaning that goes beyond it. women everywhere are pumping the pyramid in every corner of the crypto world. its near or at market peaks. just like then, all the dot bong stocks and funds will implode with brilliant exuberance. only thing you need to is replace dot com with bit bong, and time it to be about 1999 vs right now.
what will be much more explosive and take no time whatsoever, is the response of gold, why, its 31k behind where it should be. just like golds response to dot com was last century, gold will exceed that by about 4x this time.
Gold and the Miners are set to start a major bull market to 3,000.....The jib is up.
5:36 / 19:21
2/21 is a biggie for commodities, and da dollar, watch closely and read between the lines people.
If gold market was working, it would have done a clean and jerk back to 2030s. It’s noted that it didn’t, instead it was clubbed below 2000 and it’s trying to make it resistance point. Lets see who wins as everything falls apart.
$GDX - Attempting that Channel Recovery...
By: Sahara | February 15, 2024
• $GDX - Attempting that Channel Recovery...
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It’s how it works, CPI pinches consumers, consumers can’t buy as much. Doesn’t anyone understand anything anymore???
https://www.foxbusiness.com/economy/retail-sales-tumble-much-more-than-expected-january
Wait till they all wake up about fake and buttered employment hits the markets.
Gold CoT: Peek Into Future Through Futures, How Hedge Funds Are Positioned
By: Hedgopia | February 10, 2024
• Following futures positions of non-commercials are as of February 6, 2024.
Gold: Currently net long 161.7k, up 13.9k.
On Thursday last week, gold rallied as high as $2,083 but only to close out the week at $2,054/ounce. The metal has failed at this level several times in the past.
In August 2020, the metal posted a new all-time high of $2,089 and retreated. The reversal occurred again in March 2022 when it printed $2,079 and in May last year when $2,085 was tagged, followed by rejection in late December and early January this year. Then on December 4th last year, gold rose as high as $2,152 but reversed to close the session at $2,042.
After last week’s rejection, gold retreated this week, down 0.7 percent to $2,039. It can continue lower near term, with horizontal support just north of $2,000.
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Gold clubbed like a baby seal today, down 40 points, worst i have ever seen it when everything says takeoff to da moon in the plus direction. what does that mean.... we will all find out at some point.
Gold should be taking off, and miners should not be dropping. Still manipulated and hated in the order.
$GDX - Dropped from the 'Coil'. Failure to recover favours the 'Inv H&S' Plot to play out to targets...
By: Sahara | February 13, 2024
• $GDX - Dropped from the 'Coil'.
Failure to recover favours the 'Inv H&S' Plot to play out to targets...
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In the years I have been watching gold I have never seen it react this way, at this point in its cycle it should have dropped, stopped, and rolled back up. Something is broken and now believe the Fed is in complete panic mode. The Fed watches gold everyday. It is the sole indicator of economic indicators, if they are trying to control it, the coupled spring of reality will return. It’s never been so mixed up as it is today.
bought a ton of NEM this a.m.....below 33 bucks. a 5 percent yield. as somebody on seeking alpha said, "buy the plunge." Should have materially improved earnings this year. The chinese are buying gold like crazy; if the americans decide to buy a thin slice then gold should take off. NEM did a really smart thing buying in 2023, Newcrest. I consider last year the bottom of the gold miner stock bear market; but so far, the bear has continued.....NEM is cheaper easily than Barrick, both cheaper than AEM. Holding my nose buying the plunge...the longer term game plan is that Gold hits 2500 in 2.5 years and NEM is easily over 100.
$GDX - Update...
By: Sahara | February 12, 2024
• $GDX - Update.
Contra to the 'Coils I showed on the lngr-term charts prior, we do have a tighter 'Coil' on the Daily here which has the backing of the Ratio charts...
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$GDX - Broke below the January low. It's approaching the support range of the March 2023 and October 2023 lows at 25.62-26.58. If it doesn't bottom in this range it will likely bottom at the trendline that connects the March 2020 low and the September 2022 low.
By: CyclesFan | February 10, 2024
• $GDX - Broke below the January low. It's approaching the support range of the March 2023 and October 2023 lows at 25.62-26.58. If it doesn't bottom in this range it will likely bottom at the trendline that connects the March 2020 low and the September 2022 low.
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Gold Miners’ Q4’23 Preview
By: Adam Hamilton | February 9, 2024
The gold stocks’ latest earnings season is nearing, and it should prove awesome. Plenty of the major gold miners were forecasting lower costs heading into year-end, which boost profits. Amplifying them much more, last quarter gold achieved its first record closes in several years. So this sector is preparing to report what will likely prove some of its fattest earnings ever, which ought to fuel some interest in gold stocks.
For thirty quarters in a row now, I’ve painstakingly analyzed the latest results reported by GDX’s major gold miners. This VanEck Gold Miners ETF dominates this sector, commanding 30.5x the assets of its next-largest 1x-long major-gold-miners-ETF competitor! Right after every earnings season, I dig into the latest quarterly reports from GDX’s 25 largest component stocks including the world’s biggest gold miners.
Interestingly Q4 data is the most challenging to analyze. Most gold miners operate on calendar years, so some companies simply report full-year results lumping in Q4. That leaves considerably-less quarterly detail than normal non-year-ending quarters. While some Q4 numbers can be backed out using Q3 year-to-date ones, not all can. So from a sector level, Q4 results are less granular than Q1, Q2, and Q3 ones.
Further complicating Q4 analyses, the regulatory filing deadlines after year-ending quarters run much later. Annual reports are way longer and require much more effort to prepare than quarterly ones. In the US, publicly-traded companies have to file 10-Q quarterlies with the SEC by 40 days after quarter-ends. But the deadline for full 10-K annuals extends to 60 days, so many gold miners report in late February.
These reporting deadlines are even looser in Canada, the epicenter of the gold-stock universe. Normal quarterly reports for larger gold miners are due 45 days after quarter-ends, but annual deadlines extend way out to 90 days! So plenty of Canadian gold miners don’t report Q4 results until late March. And on Canadian venture stock exchanges where smaller gold miners list, those deadlines are 60 days and 120 days.
So attaining a largely-complete picture on Q4 gold-stock sector results requires waiting well into March, when Q1 is almost over! As a speculator and investor I’ve always thought it frustrating to delay that long. I usually do my Q4 analytical work in March, rather than in the second months after normal quarter-ends. But after many years of digging into these quarterly and annual reports, some key results are predictable.
While gold mining is complex and challenging, gold-mining earnings are fairly simple. Profits are just the difference between prevailing gold prices and the costs of producing gold. So a great proxy for sector earnings subtracts the GDX-top-25 gold miners’ average all-in sustaining costs from quarterly-average gold prices. That reveals the major gold miners’ collective profits per ounce, illuminating key earnings trends.
While the cost side of this equation requires some estimates, gold prices don’t. In Q4’23, gold averaged $1,976 on close. That surged a big 14.2% year-over-year, and was just a hair under the all-time record of $1,978 from Q2’23! So last quarter gold was trading at record levels, and achieved its first new record closes in 3.3 years. That was no fluke either, with Q1’24 shattering that averaging $2,031 quarter-to-date.
Gold being 14% higher last quarter doesn’t just make for 14%-better earnings, as gold-mining profits leverage higher gold prices. A year ago in Q4’22, the GDX-top-25 gold stocks averaged $1,267 AISCs while gold averaged $1,731. That made for implied unit profits of $463 per ounce, about one-fourth up into the past 30 quarters’ range. If AISCs stayed flat and gold rallied 14%, earnings would surge way more.
Q4’23’s $1,976 average gold prices less $1,267 AISCs would yield $709 in unit profits, rocketing up 53.0% YoY! The gold miners’ big profits leverage to their metal is a primary ingredient in their allure. When gold is powering higher on balance, gold-stock earnings and stock prices usually soar. So mining costs aside, last quarter’s near-record gold prices alone greatly boosted profitability. Q4 results will look fantastic.
Most of the major gold miners provide all-in-sustaining-cost guidance, target ranges where they expect AISCs to shake out. Full-year guidances are usually given early in Q1s, then sometimes later refined after Q2 or Q3 results if production is better or worse than expected. Naturally Q3 guidances for any particular year are the most-accurate, as gold miners have three established quarters of production to predict from.
In their latest Q3’23 results, the GDX-top-25 gold miners averaged midpoint full-year-2023 AISC guides of $1,304 per ounce. That’s 2.9% higher than Q4’22’s, and in-line with Q3’23’s $1,304. But it’s important to realize that $1,304 is a full-year forecast. During 2023’s first three quarters, the major gold miners’ AISCs averaged $1,313, $1,380, and $1,304 per ounce. Average those, and they ran about $1,332 year-to-date in Q3.
To achieve that $1,304 average full-year midpoint guidance, Q4 AISCs have to drop low enough to offset 2023’s first two quarters’ higher levels. The number that makes that work is way down at $1,220 per ounce! I suspect that is a bit too optimistic, but the gold miners themselves are collectively predicting that Q4 will see last year’s lowest AISCs. $1,220 would prove their best quarterly average since back in Q4’21.
That’s not a big stretch, as that would merely make for a 3.7%-YoY decline from Q4’22’s $1,267. In Q3’23, the major gold miners’ average AISCs plunged 7.2% YoY to $1,304. But for conservatism’s sake, let’s assume the GDX-top-25 AISCs last quarter will shake out around $1,275. That would make for a slight 0.6%-YoY rise, and leave full-year all-in sustaining costs near $1,318. That really portends fat profits.
Last quarter’s $1,976 average gold price less $1,275 projected AISCs yields implied unit earnings of $701 per ounce. That would soar 51.3% YoY from Q4’22’s $463, and would prove the most-profitable quarter for major gold miners as a sector since Q2’21. That would also be over 2/3rds up into the GDX top 25’s 30-quarter range of per-ounce earnings. 2020 saw bigger profits before inflation started raging out of control.
That year GDX-top-25 AISCs averaged just $1,013, which was still much higher than all the years before. While there are some exceptional low-cost gold mines in the world, overall AISCs will never retreat back to pre-inflation levels. In just 25.5 months from February 2020 just before the pandemic-lockdown stock panic to April 2022, the Fed ballooned its balance sheet or the US monetary base by 115.6% or $4,807b!
As of last week the Fed’s balance sheet still remains 83.5% or $3,471b higher than pre-pandemic levels! And other major central banks followed suit in redlining their monetary printing presses in recent years. So with global money supplies far higher, general price levels including mining costs will never return to where they were. But that enormous monetary inflation baked into the world economy is very bullish for gold.
Global gold prices will almost certainly eventually normalize at levels reflecting this crazy money-supply growth. Gold averaged $1,577 in January and February 2020 before central banks panicked. Climbing 80% from there just to reflect the Fed’s huge dollar inflation alone not even considering the rest of the world’s would catapult gold near $2,839. Gold ought to continue climbing faster than AISCs in coming years.
With the major gold miners set to reveal blockbuster results in coming weeks, will traders care? Depends on these markets. Despite gold’s near-record Q4’23 and record-shattering Q1’24 so far, speculators and investors aren’t paying attention. The gold stocks continue to languish well out of favor, nowhere near reflecting today’s high prevailing gold prices. GDX has mostly drifted sideways on balance in recent months.
As of midweek, gold’s young upleg since its last major bottoming in early October clocked in at 11.7% gains. Yet over that same span, GDX has dismally only rallied 4.3%. That makes for terrible 0.4x upside leverage to gold. As gold stocks are much riskier than gold itself, they have to well outperform their metal on balance to be worth owning. Normally the major gold stocks of GDX amplify material gold moves by 2x to 3x.
So had this sector been performing properly, GDX would be between 23% to 35% higher over the past four months. In share-price terms, that equates to about $32.50 to $35.50. This chart would look much better if GDX was higher in that normal range rather than languishing near $27.50. Yet despite gold stocks’ ugly lagging recently, GDX remains in a well-defined bull uptrend born way back in September 2022.
Though gold-stock prices are far too low to reflect these high prevailing gold levels or their own earnings-driven fundamentals, traders don’t care. Both gold and its miners’ stocks remain deeply out of favor. In this kind of environment mired with apathy and bearish sentiment, it probably won’t matter how good of Q4 gold miners report. If traders are indifferent and not paying attention, they won’t even notice those results...
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DiscoverGold
Gold spot to 2017 today, may test support below that, we see if it bounces or stays on a friday.
I sold a tad still holding core positions. Its just manipulated got to hold some in these periods imho
and while usually nothing changes, ...almost always true, once in a while something does change. books have been written on disrupters. Disruptive technologies. Surely Bitcoin, a direct competitor to the miners, is one of them. It is good and well to say gold has been around for 5000 years, but over that time, ...there have been things like the industrial revolution, and the information revolution, which have changed the world for earthlings and bitcoin is part of the info revolution. It is a direct competitor to gold. Far more successful by 30 to 50 fold ...it is not even a close call to put it mildlly
will both gold and the miners and the coin suffer as assets in the event of a recession...yes of course they will and that too is not a coin toss this year.
I am convinced this time is slightly different. So here are the similarities
1. the miners are making money now, but not tons....with gold at 2020, the big producers are in pretty good shape, so too the developers. Still, the macro outlook gives mixed signals. It feels very buoyant, very 1999, and as we know in 1999, that great tech internet bull market, the miners were very bad. We today have a major tech bull market in AI, and the Big 7, so we should not be shocked to see the pattern repeat. A no brainer
2. the devastating differentiator is Bitcoin, and Ethe. The market cap of bitcoin and its associated products is staggering, something that puts the mining sector's market cap into the dumpster can. Clearly, people are buying bitcoin. It has gone mainstream and even the u.s. government allegedly has "diversified" into bitcoin.....And when any 30 or 40 year old looks at the returns of bitcoin the past year, vs. gold and especially gold miners, that ends the debate. Bitcoin is lapping gold to understate it.....So the money that is anti system, ...it is an easy choice which to pick, especially with the etf's being approved..
3. So what about the miners. Well historically, the solid gold miners have received healthy PEs on the nature of 20 to 30 to 1 type PEs. and even higher than 30 as befits a bull market in the metals...; now you can see them at less 15 perhaps the very finest that is.. But in lieu of bitcoin, that is probably no longer appropriate.
They deserve as a wildly under achieving asset class something lower and possibly far lower. When Steel manufacturers went out of favor, like U.S. steel, which has a lot of mining assets, as does Cleveland cliffs, the PEs went to 2 and 9 respectively. So there is a lot of room for PE shrinkage....and there is no time soon that AEM or Gold or NEM will have a PE anywhere close to even 10. ....so this does not bode well whatsoever.
We are in a bad spot in time, and also there is a competitive product. Killed on both ends. Steel waited many years for the companies to get a modicum of respect as they all shrank...U.S. steel from over 90 to 7 at the bottom, and cleveland from over 50 to 5 at the bottom....it took many many years. as the PEs shrank as the market collectively said, I don't want to own this sector, no matter how low the PEs, ..These companies are facing many headwinds, china among them, and so too today, the miners are in a bad spot in time, the 1990s revisited, plus they too have a hot rival like china called Bitcoin, running them out of buisness.
The more spot gold can hold above 2000, the confidence in the miners will start to grow...and now it looks like the POG has strong support at 2020......We could be in a position where the miners simply start to slowly inch up as investors start to believe they can make real money. POG at 2300 and they are doing well, but at 2700 they are cash machines....I think gold at 2500 will be the clarion call. GDX explodes from 50 to 70, and so forth...
they have a long long way up to get back to normal, i dont think its anything but sentiment that is way overdue. GDX has a long long way to go.
the miners are trading very heavy.....who knows but sometimes when they have done this in the past it says, (today with gold up 10 bucks), they they are sensing something wicked this way comes. ....a collapse?
i sold again.....F Pan and the Miners. will buy at 9
I like pan american as well. Miner sure are acting crappy though ive been diversifying into some oil lately
$GDX - If you can wait, and not get tired of waiting...
By: Sahara | February 2, 2024
• $GDX - If you can wait, and not get tired of waiting...
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DiscoverGold
Gold CoT: Peek Into Future Through Futures, How Hedge Funds Are Positioned
By: Hedgopia | February 3, 2024
• Following futures positions of non-commercials are as of January 30, 2024.
Gold: Currently net long 147.8k, down 21.7k.
Gold gapped up on Tuesday, reclaiming the 50-day. It remains above the average at $2,039. The downside, once again, is that gold bugs failed to hang on to all of the gains. By Thursday, the metal rallied as high as $2,083 but closed the week at $2,054/ounce, up 1.8 percent.
Non-commercials, in the meantime, continue to cut net longs in gold futures, which are at a 15-week low. These traders began to reduce their long exposure after the yellow metal failed to reclaim $2,080s.
Gold rose as high as $2,152 on December 4th but reversed to close the session at $2,042. Resistance at $2,080s has proven tough to crack. In August 2020, the metal posted a new all-time high of $2,089 and retreated. The reversal occurred again in March 2022 when it printed $2,079 and in May last year when $2,085 was tagged, followed by rejection in late December and early January. We can now add to this Thursday’s rejection. This opens the door to lower prints in the sessions ahead.
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DiscoverGold
there is no question whatsoever.
https://www.thegatewaypundit.com/2024/02/is-bureau-labor-statistics-cooking-books-joe-biden/
all of which is why i am buying paas.
because right now, looking at the 2 or 3 year charts, the miners are clearly in a bear market, while the fantasy world of the funds and tutes have pushed the equities into a continuous bull market for years now, under the establishment narratives that lets you pay a PE of 30 or 40 or 50 ,for an S and P stock...
when i first got involved in the gold and gold mining sector the year was 2001. I stumbled out of the tech sector a winner, which was in a freefall...like all stocks. Solid mining stocks, which had been 13 bucks a share, were selling at 2 or 3 bucks. They were despised as gold went below 300 bucks an ounce. People had lost all or most of their money in the wild ponzi mania of the late 1990s which was in the process of bursting...........and so disillusioned, some of them, like me, went into the miners....which had been written off. Are we needing this sort of thing before the miners will be bought by the public and funds?
the bottom line here is that the central planners, with their endless government reports on employment or the economy, can crush the gold miners with their dicey press releases. It takes a genuine collapse of the stock market, for investors to lose faith in the governments endless predictions and largely dishonest economic reports. ..These ponzis can go on for a very long time. Even if for instance, the u.s. gov requires a trillion to service the debt, just to stay level, the investors don't care....as long as the FED and the dc agencies issue reports saying everything looks pretty good, the stock market will go up..............It takes something far more jolting, outside the system, to cause investors to lose their appetites for general equities.
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http://www.vaneck.com/index.cfm?cat=3192&tkr=GDX&LN=3-02
The Gold Miners ETF seeks to replicate as closely as possible, before fees and expenses, the price and yield performance of the NYSE Arca Gold Miners Index. The Index provides exposure to publicly traded companies worldwide involved primarily in the mining for gold, representing a diversified blend of small-, mid- and large-capitalization stocks. As such, the Fund is subject to the risks of investing in this sector.
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