Gold Miners ETF (GDX)

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Gold Miners’ Q3’23 Fundamentals
By: Adam Hamilton | November 17, 2023

The major gold miners just finished reporting fantastic Q3 results. A potent combination of higher gold prices and lower mining costs fueled skyrocketing profits, some of gold stocks’ biggest earnings growth ever! These larger miners were generally able to overcome depletion, leaving their collective output stable. Posting such blowout numbers should help attract institutional investors back to this battered sector.

The GDX VanEck Gold Miners ETF remains this sector’s dominant benchmark. Birthed way back in May 2006, GDX has parlayed its first-mover advantage into an insurmountable lead. Its $11.9b of net assets mid-week dwarfed the next-largest 1x-long major-gold-miners ETF by over 31x! GDX is undisputedly the trading vehicle of choice in this sector, with the world’s biggest gold miners commanding most of its weighting.

Gold-stock tiers are defined by miners’ annual production rates in ounces of gold. Small juniors have little sub-300k outputs, medium mid-tiers run 300k to 1,000k, large majors yield over 1,000k, and huge super-majors operate at vast scales exceeding 2,000k. Translated into quarterly terms, these thresholds shake out under 75k, 75k to 250k, 250k+, and 500k+. Those two largest categories account for over 53% of GDX.

The major gold stocks are languishing really out of favor today, with GDX down 1.7% YTD despite gold rallying 7.5%. Normally the GDX gold stocks leverage material gold moves by 2x to 3x. This past spring, a good GDX upleg soared 63.9% higher amplifying gold’s parallel 26.3% one by 2.4x! This sector hasn’t been devoid of excitement this year, so this festering bearish sentiment looks anomalous and unsustainable.

For 30 quarters in a row now, I’ve painstakingly analyzed the latest operational and financial results from GDX’s 25-largest component stocks. Mostly super-majors, majors, and larger mid-tiers, they dominate this ETF at 87.2% of its total weighting! While digging through quarterlies is a ton of work, understanding the gold miners’ latest fundamentals really cuts through the obscuring sentiment fogs shrouding this sector.

This table summarizes the operational and financial highlights from the GDX top 25 during Q3’23. These gold miners’ stock symbols aren’t all US listings, and are preceded by their rankings changes within GDX over this past year. The shuffling in their ETF weightings reflects shifting market caps, which reveal both outperformers and underperformers since Q3’22. Those symbols are followed by their current GDX weightings.

Next comes these gold miners’ Q3’23 production in ounces, along with their year-over-year changes from the comparable Q3’22. Output is the lifeblood of this industry, with investors generally prizing production growth above everything else. After are the costs of wresting that gold from the bowels of the earth in per-ounce terms, both cash costs and all-in sustaining costs. The latter help illuminate miners’ profitability.

That’s followed by a bunch of hard accounting data reported to securities regulators, quarterly revenues, earnings, operating cash flows, and resulting cash treasuries. Blank data fields mean companies hadn’t disclosed that particular data as of the middle of this week. The annual changes aren’t included if they would be misleading, like comparing negative numbers or data shifting from positive to negative or vice-versa.

Before this latest earnings season got underway, in mid-October I penned an essay on likely gold miners’ fat profits. My thesis then was “much-higher prevailing gold prices and forecast lower costs ought to make for some of this sector’s best earnings growth ever.” That all proved true, making for a fantastic quarter for the major gold miners! This is one of their best in the 7.3 years I’ve been advancing this research.



Production growth trumps everything else as the primary mission for gold miners. Higher outputs boost operating cash flows which help fund mine expansions, builds, and purchases, fueling virtuous circles of growth. Mining more gold also boosts profitability, lowering unit costs by spreading big fixed operational expenses across more ounces. Yet the GDX top 25’s collective output in Q3 fell 6.3% YoY to 8,073k ounces.

For years the world’s largest gold miners have struggled to overcome depletion, which I’ve analyzed in depth in many of this series’ essays. The super-majors and larger majors operate at such vast scales it is really difficult for them to grow their outputs. That’s one reason I’ve long preferred trading smaller mid-tier and junior gold miners. They’ve proven much more able to consistently grow their production from littler bases.

But the GDX top 25’s lower aggregate output in Q3 is distorted by two unusual things. In order to write these weekly web essays early Thursdays, my data and charts have to be finalized by late Wednesdays. One of the world’s biggest gold miners, South Africa’s Gold Fields, dragged its feet in reporting even Q3 operational results. They finally came in overnight leading into Thursday, after my spreadsheets were finished.

Super-major GFI produced 542k ounces of gold last quarter, which boosts the actual GDX-top-25 total to 8,615k. That’s dead-flat compared to the comparable Q3’22’s 8,617k! So the world’s biggest gold miners were able to overcome depletion in Q3’23. And that’s despite king-of-the-hill Newmont really struggling, with Q3 production plunging a whopping 13.2% YoY to 1,290k ounces. That dragged the overall total to flat...

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