Buying Opportunity For These Two Gold Miners

While the S&P-500 (SPY) has taken a beating over the past month, leaving the index 18% from its highs, the damage inflicted has been tame relative to the shellacking we’ve seen in the Gold Miners Index (GDX).

Not only has the GDX’s decline been double that of the S&P-500, but the most recent drop is one of the worst in a decade in terms of velocity. This is because the GDX was down 44% in just 95 trading days last Friday, translating to an annualized decline of 79%.

Daily Sentiment Index Data

(Source: Daily Sentiment Index Data, Author’s Chart)

This decline, coupled with muted 10-year returns since the peak of the last bull market cycle (2011), and lifeless 2-year returns since the August 2020 peak, has led to despair in the sector, with many investors not even interested in looking at their portfolios if they hold precious metals stocks.

I believe this has bred conditions for a violent rally to the upside, especially with sentiment for gold (GLD) sitting at its lowest levels in 18 months, as most investors have also given up on the metal.

In this update, we’ll look at two high-quality miners that have been thrown out with the proverbial bathwater:

Agnico Eagle Mines (AEM)

Agnico Eagle Mines (AEM) is the world’s 3rd largest gold producer, on track to produce ~3.3 million ounces of gold in 2022 from more than ten mines globally. Continue reading "Buying Opportunity For These Two Gold Miners"

Golden Opportunity for These 3 Mining Stocks

It’s been a tough year for investors in the Gold Miners Index (GDX), with the ETF shedding 38% of its value since its April highs.

It’s been a tough year for investors, with the ETF shedding more than 45% from its multi-year highs. A gold price decline exacerbated this tumble. For the weakest producers, this is a concern.

While this has led to many investors steering clear of the sector, some miners are now at their lowest multiples since the 2015 bear market bottom, when margins were half what they are today. Many miners were carrying considerable amounts of debt.

Today, this same group of producers will enter Q4 2022 in net cash positions, are paying out dividends double that of the S&P-500 (SPY), and are much more disciplined, learning from past mistakes. To summarize, I see this as a rare opportunity to buy a few high-quality businesses.

Let’s take a look at three stand-out names below: Continue reading "Golden Opportunity for These 3 Mining Stocks"

3 Gold Miners To Inflation-Proof Your Portfolio

It was another turbulent week for the major averages, with the S&P 500 (SPY) finding itself down 3%, extending its decline to the 20% mark. However, one sanctuary from the turbulence was the Gold Miners Index (GDX). Not only did the index not lose ground last week, but it gained 3%, and it is one of the few ETFs sporting a year-to-date gain. This continued relative strength combined with an undervalued industry group relative to historical levels suggests that this is a group worth keeping a close eye on for investors looking to inflation-proof their portfolios.

Gold Miners Index (GDX)


With inflation readings continuing to sit at multi-decade highs and the Federal Reserve maintaining its hawkish pivot, there are few places to hide in today's market. However, one asset that has historically done well in periods of negative real rates is gold (GLD), and one way to collect income with exposure to the gold price is through gold miners. The caveat, however, is that they must be trading at a deep discount to net asset value [NAV] and ideally out of favor. With more than 80% of miners trading at discounts to NAV and the industry group down nearly 40% from its Q3 2020 highs, it currently meets both requirements. Let's look at three names that make for solid buy-the-dip candidates: Continue reading "3 Gold Miners To Inflation-Proof Your Portfolio"

Three Gold Miners Trading At Deep Discounts

It’s been a rollercoaster ride for investors in the Gold Miners Index (GDX), with the index starting the year up 24% only to find itself back at a negative year-to-date return. While this has led to disappointment among many investors, I believe that this complete retracement is a gift, and it's worth noting that the GDX is still massively outperforming other sectors despite the sharp reversal. However, the key when investing in gold miners is to buy quality, and it rarely pays to bet on turnarounds from the lower-quality or lower-priced names in hopes that they will play catch-up. In this update, we'll look at three sector leaders worthy of a closer look.

Agnico Eagle Mines (AEM), Eldorado Gold (EGO), and Maverix Metals (MMX) all provide exposure to the gold price but have little in common from a cost, scale, and jurisdictional standpoint. All three operate in very different jurisdictions and have costs ranging from $400/oz to $1,300/oz. From a size standpoint, Maverix produces as little as ~40,000 gold-equivalent ounces [GEOs] per annum on an attributable basis. In contrast, Eldorado Gold produces over 400,000 GEOs per year, and Agnico produces over 3 million ounces of gold each year. However, all three companies share one key trait: enviable organic growth. In a sector that lacks growth stories, with most being inorganic, these companies do not need a higher gold price to significantly increase cash flow per share looking out to FY2025.

Beginning with Agnico Eagle Mines (AEM), the company is the 3rd largest gold producer globally and expects to produce 3.3 million ounces of gold in 2022 at all-in sustaining costs [AISC] between $1,000/oz to $1,050/oz. The company's 10+ mines are located in Canada, Australia, Finland, and Mexico, and the company has a large development that could add 700,000+ ounces per annum of production by 2030. Among the million-ounce producers, this jurisdictional safety is a rarity and is one reason that AEM is a favorite among funds, with 95% of production coming from Tier-1 ranked jurisdictions vs. Barrick Gold and Newmont at less than 60%, and Gold Fields at less than 50%. Continue reading "Three Gold Miners Trading At Deep Discounts"

Three Gold Miners To Buy On Dips

It’s been an ugly week for the major market averages, with the S&P 500 (SPY) continuing its violent decline from its Q1 highs. Prior to this week, the Gold Miners Index (GDX) was a sanctuary from the turbulence, but when the market heads past the 15% correction mark, few stocks are sheltered from the turbulence. While this has been painful for investors that chased miners in early Q2 near their highs, this is set up an excellent buying opportunity for patient investors. So let’s look at a few names in the GDX where the selling looks to be overdone:

GDX Gold Index


Over the past month, we’ve seen several gold miners slide more than 25% from their highs, and in many cases, these corrections are entirely justified. This is because several producers have weak balance sheets and high costs, making them very sensitive to weakness in the metal price and rising interest rates. However, when it comes to names like SSR Mining (SSRM), Yamana Gold (AUY), and Barrick (GOLD), which are sitting in net cash positions or expect to be net-cash positive by Q4, the recent pullback makes little sense, especially given that they’re some of the best operators sector-wide. Continue reading "Three Gold Miners To Buy On Dips"