Gold Miners’ Q4’22 Fundamentals

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From the link:

March 10, 2023

The gold miners are finishing reporting their latest quarterly results, revealing how they are actually faring fundamentally. This reality check is important, as sentiment is down in the dumps after this sector was pummeled lower with gold in February. While the major gold stocks’ Q4’22 results were mixed, they are doing much better than traders are now giving them credit for. Their interrupted bull run looks alive and well.

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 $11.3b of net assets mid-week dwarfed the next-largest 1x-long major-gold-miners ETF by fully 30.6x! GDX is undisputedly the trading vehicle of choice in this sector. But unfortunately it has been sucking wind in recent weeks.

The gold stocks were really building momentum and winning back traders heading into February, with GDX blasting 52.1% higher in just 4.0 months on a parallel 20.2% gold upleg! But both the metal and its miners’ stocks were getting short-term overbought, a healthy mid-upleg pullback was due. It hit hard and fast, quickly accomplishing its essential mission of eradicating bullish sentiment. And it’s now tuckering out.

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Gold Miners’ Q4’22 Fundamentals

By Adam Hamilton The gold miners are finishing reporting their latest quarterly results, […]

aheadoftheherd.com

 

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... according to Randy Smallwood, President and CEO of Wheaton Precious Metals and Chair of the World Gold Council.
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Smallwod spoke with Kitco News journalist Ernest Hoffman at the recent PDAC 2023 mining convention in Toronto, where he discussed the state of the precious metals market. He also explained what’s driving the recent M&A activity in the mining sector.

“I think it's a problem with growth opportunities out there,” he said. “When people start looking at their production profile going out, they realize they've got some holes four, five, six years out, and shareholders don't want to see those production holes come to fruition, so everyone has to look at different ways to grow.”

Smallwood said that things like permitting and licenses are making it harder and harder to build new mines. “There's no doubt consolidation is going to play a more important role as time moves on on that front, and I think we're starting to see it's one of the paths towards filling some of those production holes.”

He also acknowledges that M&A is a way for mining majors to support their stock prices and keep investors happy while new projects get underway. “Definitely, assuming that it's good value that they're buying,” he said. “Sometimes you can pay too much for these things.”

Smallwood believes that the mining sector has been in a growth phase since 2018, following a focus on balance sheet repair during the five years prior. “When we look at where demand is going for metals in this world, I think we still have a lot of growth in this industry in terms of new mines coming on stream,” he said. “There's a lot of very, very tired old mines that are getting near the end of their life over the next few years, and so they're going to have to be replaced with something. Not only that, there's an increasing demand as the world tries to electrify, especially for a lot of the critical minerals. We don't see any slowdown on that, there's going to be continued investment in the space.”
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Gold will gain from dedollarization, and the critical shortages are not in the metals themselves - Randy Smallwood

(Kitco News) - The politicization of the U.S. dollar is forcing banks into gold, while the Fed is making capital more expensive at a time when mines need to invest in growth, according to Randy Smallwood, President and CEO of Wheaton Precious Metals and Chair of the World Gold Council.

www.kitco.com