Monday, 1 July 2019

Gold Miner Pulse 2019 (half-year update)

The focus of this blog article is on the gold and silver miners from a tactical point of view: how do PM miners perform relative to the price of gold or silver.

The blog article is monitoring whether trends are persisting. Therefore the graphs posted here are showing daily observations both over one year and with a 6 months time horizon. For the long term reference frame, see the articles referenced at the bottom.


Unhedged Gold miners relative to Gold bullion
Gold was last breaking above $1300 only by May 31st. The yellow metal rapidly breached the $1360 four-year old resistance and broke above $1400 on June 21. On June 25 the Comex close at $1423 marks the current rally top. Gold is consolidating above $1400 to end the first half of 2019 at $1408.9. The initial rally again spurred enthusiasm for the miners, however sentiment soon turned quite meek. Only gold breaking above its 4 year trading range was lifting the HUI/Gold ratio breaking its late March high.

Unhedged Gold Miners index HUI relative to gold bullion (spot market). Daily observations over 6 months - Click to enlarge
This overview article extends the perspective to a full year view (including MACD)

Unhedged Gold Miners index HUI relative to gold bullion (spot market). Daily observations over 12 months - Click to enlarge
Despite gold weakening to $1250/Oz towards end June 2018 the HUI/Gold ratio was not materially different from the current level. This illustrates to what extent miners have been lagging gold since last year. Mining investors may enjoy increasing profits or reducing losses over the last few weeks, it should however be clear that this recent uptrend has nothing in common with the euphoria of the 2016 precious metal recovery.

How we got there:
The last longer term review has been posted end December 2018: Precious metals mining in 2018: a dark cloud with a silver lining & 2019 outlook .

Persevering weakness of the gold price, plunging below $1200 by mid August, wore out miner optimism. Technicians didn't enjoy the inverted head & shoulders pattern very long. Late October, miners plunged, despite precious metals keeping firm.

Gold rallying to $1247 early December made miners advance substantially. Though the trend quickly reversed upon little gold weakness. The on-off game continued into 2019 with the HUI/Gold ratio unable to lock in a meaningful advance.

By January 25 gold broke above $1300 which made HUI/Gold regain its 50 dma and gold firming to $1320 by end Jan 2019 ultimately caused HUI/Gold to reach its declining 200 dma. The Chinese new year rally lifted HUI/Gold above its 200 dma. It seems ages ago we last enjoyed this situation.  While gold kept flirting with the $1300 price tag, HUI/Gold was trending higher. Thereafter everything was on the brink again. A recovery started off  on May 31st with gold rallying.

The HUI/Gold regression (previously also called 'bear market logic'): a linear but non-proportional relationship between HUI and Gold puts HUI/Gold (or for that purpose Gold/XAU) as valuation parameter in a different perspective. The HUI index has been calculated since 1996.


Global X Silver Miners ETF (SIL) relative to silver bullion


Global-X Silver Miners ETF, SIL relative to silver bullion; Daily observations over 6 months. Click to enlarge
As precious metals started firming on May 31st, miners rallied. However silver miner enthusiasm remained subdued while the metal kept struggling to break above $15/Oz. Silver reluctantly following the gold rally is raising hope again.
This overview article extends the perspective to a full year view (including MACD)

Global-X Silver Miners ETF, SIL relative to silver bullion; Daily observations over 12 months. Click to enlarge
2019 comments: SIL/Silver only turned up as the metal resumed its uptrend finally breaking above $16/oz by Jan 31, 2019. Silver pausing its recovery raised some doubt, yet SIL/silver broke above its 200 dma. With the metal oscillating around $15/Oz, the SIL/silver ratio curbed and then broke down again. Silver sliding further wasn't any help.

How we got there:

The last longer term review has been posted end December 2018: Precious metals mining in 2018: a dark cloud with a silver lining & 2019 outlook .

In the first half year of 2018, silver miners reacted adversely to the silver price trend. Initially silver miners had shown some resilience despite metal weakness. Yet they didn't benefit from the early October silver recovery either. With the metal lingering on below $15/Oz, silver miners lost their edge. The mid December advance is mainly reflected the rally of streamer Wheaton Precious Metals. The SIL/Silver ratio turned south again, though silver broke above $15/oz.


Canadian Gold and Silver Mining indices
How gold miners are performing is shown by the capitalization weighed gold miners index of stocks included in the Gold Miner Pulse database (yellow diamond symbols). Note that most quotes are in CAD, which has been fluctuating to the USD. The blue graph shows the GMP silver miners index. It has been losing its edge lately.The long term depreciation of the loonie mitigated the miner loss during gold miner bear market.


GMP list based (and capitalisation weighed) gold (yellow dots), silver (blue) and equal weight (red) miners indices. Reference 1000 on Nov 19, 2010  (click to enlarge)
The third index added uses equal initial weights of all (silver and gold) miners from the GMP database. Because of its simple weighting scheme, comparing this index to the capitalization weighted indices gives a fair idea of how junior miners and explorers fare as compared to the large miners.


The gold price (in USD) now is significantly above the price ($1342/Oz) when this list was started in Nov 2010. The aggregate performance of miners (-58%) over a decade has been extremely poor. Miners failed to make any significant gain as gold rallied towards its ATH in August 2011 and continued lagging until summer 2012. With only minor counter trend action, miners have again been lagging gold since almost two years.

How we got so deep into trouble is well illustrated when showing a long term graph of those capitalization weighted miners indices. The revival after late Jan 2016 healed the last leg down of the miner bear market. We briefly topped the May 2013-Oct 2014 trading range.


Long term graph of the GMP list based (and capitalisation weighed) gold (black), silver (blue) and equal weight (red) miners indices. Reference 1000 on Nov 19, 2010. - Data till Dec 29, 2017 (click to enlarge)

The silver miners index rose till 1400 in April 2011, peaking three weeks earlier than did the silver price. The silver miners index also posted a higher maximum during both the March 2014 and June to early August recovery than it did in the August 2013 recovery. The gold miners index and the equal weight index did not peak higher at any of the failing 2014-15 recoveries than they did in August 2013. By January 2016 silver miners nearly completely lost their edge relative to gold miners, yet the recovery proved more vigorous. The below long term graph covers over three years: the end of the bear market with miners bottoming by Dec 2015, the 2016 boom-bust over the tedious months early 2018, with miners unable to match gold strengthening. Miner quotes were jittery after gold plunged below $1200. Towards end 2018 gold strengthened to $1280 with miners recovering timidly.


Mid/Long term graph of the GMP list based (and capitalisation weighed) gold (black), silver (blue) and equal weight (red) miners indices. Reference 1000 on Nov 19, 2010. - Data till Jun 28, 2019 (click to enlarge)
Performance graph
There is an important performance disparity among the gold and silver miners of the GMP database. Too many laggards seem moribund. The median (or middle) miner (with an equal number better and worse) is losing 61.1%: almost tripling is needed to break even. The average loss posts at 34.8% as the performance distribution is slanted towards the (few) high gains.


GMP Miners sorted by loss to gain since inception on Nov 19, 2010. Click to enlarge
There are 11 miners/explorers losing 90% or more, with 4 thereof down over 95%. At the opposite side only 14 miners are quoting above their Nov 2010 mark, led by Kirkland Lake; 7 stocks have doubled. These top 7 miners are omitted in the above graph to avoid scale expansion, but you find the top-10 in full detail below:


GMP elite miners, sorted by gain since starting observations in Nov 2010 using a logarithmic view with minor ticks 10% apart in the bottom decade and 100% apart in the next decade - Click to enlarge

A more detailed analysis including list composition changes, is added below. The miners included in the database are classified in five performance quintiles. This allows evaluating how individual miners went down with the herd... or withstood the tempest.

Miners performance update

During 2011-15 and even over the long haul, the relative performance of mining majors to the precious metals they produce was disappointing for major gold miners, even while the metals were in a solid uptrend.  See: Gold miners: three decades for naught or Decades of underperformance

Remarkably, during the gold miner bear market and it subsequent recoveries till summer 2017 the HUI - gold relationship followed a linear regression. Thereby the HUI slides dis-proportionally during any gold decline, but also shows the expected leverage at a gold advance. See for example:
Linear Regression between the Gold Price and the HUI miners index (April 2017)
In 2018 it became obvious that the HUI once more started lagging this observed relationship.

Reference date

Miner performance calculated is relative to the start of the calculation of the GMP based gold miners and silver miners index on Nov 19, 2010. For your information: gold closed at US$1342/oz and silver at US$27.07/oz on that day.

Bear market damage

With hindsight: from early 2011 onward miners started lagging precious metals in their ascent to all time highs. The harsh miner bear market decimated the majority of explorers. Acquisitions continued, but hefty premiums no longer were paid. There have been some bankruptcies among miners and some more delisting of explorers running low on cash and assets. You find an overview of list compositions changes at the end.

Today's statistics

Today the median loss for the miners in the database stands at 61.06%, while the average loss is 34.76%. The median is the value observed in the middle of the distribution.

Over the long haul, 11 miners are down 90% or more with 4 thereof down over 95%.   
Only 14 miners are up since Nov 2010, led by Kirkland Lake. The top 7 have doubled.

Since previous evaluation on Jun 14, 2019 the median added 1.68% while the average sweetened by 3.73%.

Advances (69 miners) led declines (18) on consecutive evaluations. The remainder of the set of miners (7) quotes almost flat: within a narrow +1% range.


Exchange rate

Most quotes are in CAD and likewise all performance graphs illustrate the return in CAD.
B2 Gold (BTG), Barrick (GOLD), Hecla Silver (HL), Coeur d'Alène (CDE) , Newmont Mining (NEM) and Wheaton Precious Metals (WPM) quote in USD. Their performance has been compensated for the long term depreciation of the loonie.


Redesign
A few list components didn't quote daily any longer. Without any exception these were penny stocks, valued below CAD 0.10. Their market capitalization was below 10 M CAD. Not surprisingly, these stocks were down over 90%. Following explorers or miners have been excluded:  Atlanta Gold (ATG), TVI Pacific (TVI), CMC metals (CMB), Miranda Gold (MAD), Black Dragon Gold (BDG), Lincoln Mining Group (LMG), Eco Oro Min (EON) and Golden Queen Min (GQM). 

Latest / Expected list changes

Newmont and Goldcorp have merged, with Goldcorp shareholders obtaining 0.328 Newmont shares for each Goldcorp share + $0.02.
Barrick made a hostile bid on Newmont below market price. It made little chance. What eventually results is a joint operation of their Nevada mines.


Graphs section

Individual miner performance since Nov 19, 2010. Miners are identified by their TSX trading symbols.

Click any of the graphs to view them at true size

Top quintile: the best 20% of miners

Subtop: the average decline is amid this quintile

Midrange quintile: by definition you find the median in this quintile

Laggards quintile

Investors nightmare: a majority of these miners & explorers is down over 90%.


For your information: below is the top quintile graph of Jun 14, 2019


Top quintile: the best 20% of miners


Comments and composition changes since 2018:

  • Alio Gold (ALO) replaces Rye Patch Gold (RPM) upon a business combination of both.  ALO 'inherits' the track record of RPM.
  • Primero has been delisted after its acquisition by First Majestic.
  • Klondex was acquired by Hecla Mining. Coverage is discontinued and Klondex has been delisted.
  • After a friendly take-over bid of the Australian South32 miner on Arizona Mining (AZ), this top performer eventually left the selection.
  • We introduced Gold Standard Ventures (GSV) to our list in replacement of AZ mining.
  • After the bankruptcy of Red Eagle Mining (R), Teranga Gold Corporation (TGZ) was added in replacement.
  • Upon the merger of Barrick and Randgold, the more appealing Randgold ticker GOLD was maintained, whereas the merged mining company is called Barrick. The ticker ABX is removed and the reference share price is divided by the 6.128 Randgold share exchange value. Randgold shareholders thereby obtain 33% of the new Barrick.
  • Nighthawk (NH.TO) has been added to the list.
  • Atlanta Gold (ATG), TVI Pacific (TVI) and CMC metals (CMB), Black Dragon Gold (BDG.V),  Lincoln Mining Corp (LMG) and Miranda Gold (MAD) were dropped from the list. These explorers don't quote daily any longer. They have become hard to trade as market cap dwindled to a few million CAD.
  • Subsequently also Black Dragon Gold (BDG), Lincoln Mining Group (LMG), Eco Oro Min (EON) and Golden Queen Min (GQM) were dropped in March 2019.
  • Tahoe Resources was acquired by Pan American Silver (PAAS) as of Feb 22, 2019
  • Several replacements have been added to the list after mergers and de-listings. Those are Golden Arrow Gold (GRG) on the Toronto venture exchange, Alacer Gold (ASR), Belo Sun Mining (BSX), Marathon Gold (MOZ), Midas Gold (MAX) and Roxgold (ROXG) on TSX. Newmont (NEM) - NYSE in USD were also added. Subsequent additions were ASA Gold & Precious Metals (ASA), Evrim Resources (EVM) and Victoria Gold (VIT)
  • Newmont (NEM) has completed the acquisition of Goldcorp (G on TSX and GG on US markets)

  • A few name changes:
  1.   Novacopper (NCQ) now is called Trilogy metals (TMQ)
  2.   Astur Gold (AST) changed to Black Dragon Gold (BDG)
  3.   Pilot Gold (PLG) changed to Liberty Gold (LGD)
  4.   Silver Wheaton (SLW) changed its name to Wheaton Precious Metals (WPM)
  5.   Silver Standard Resources changed to SSR Mining with ticker SSRM
  • And ticker changes:
  1.   Kirkland Lake Gold (KGI) changed its TSX ticker to KL
  2.   Red Eagle Gold changed over to the main market. Its TSX ticker now is R.
  3.   Pan American Silver changed its TSX ticker to PAAS (in line with that on US markets)
  4.   Golden Minerals changed its TSX ticker to AUMN (also in line with that on US markets)
The complete cumulative list of acquisitions or delistings since end 2010 (included below) is quite impressive.

Former mining or exploration company
TSX ticker
Date
Merging or acquiring miner or explorer / Delisted(red)
or follow up suspended (dark red)
Capital Gold Corp.
CGC
8/04/2011
Acquired by Gammon
Fronteer Gold Inc.
FRG
8/04/2011
Acquired by Newmont
Richfield Ventures
RVC
1/06/2011
Acquired by NewGold
ECU Silver Mining Inc.
ECU
8/10/2011
Acquired by Golden Minerals Cy.
Century Mining Corporation
CMM
14/10/2011
Merged with White Tiger Res.
Trade Winds Ventures Inc.
TWD
30/11/2011
Acquired by Detour Gold
Silvermex Resources Inc.
SLX
29/06/2012
Acquired by First Majestic
Trelawney Mining and Exploration
TRR
22/06/2012
Acquired by Iamgold
Extorre Gold Mines Limited
XG
24/08/2012
Acquired by Yamana
Great Basin Gold
GBG
19/09/2012
Delisted upon bankruptcy
Queenston Mining Inc
QMI
29/11/2012
Acquired by Osisko
High River Gold Mines Ltd.
HRG
14/03/2013
Merger with Nord Gold
Orko Silver Corp.
OK
15/04/2013
Acquired by Coeur d'Alène
Esperanza Silver Corporation
EPZ
30/08/2013
Acquired by Alamos Gold
Plato Gold Corp.
PGC
31/07/2013
Sold its Quebec gold resource to Monarques
Pacific Rim Mining Corp.
PMU
29/11/2013
Acquired by OceanaGold
American Bonanza Gold Corp.
BZA
7/07/2014
Acquired by Kerr Minerals, which will been absorbed by San Gold
Osisko Mining Corporation
OSK
16/06/2014
Acquired by Agnico Eagle and Yamana
San Gold Corporation
SGR
22/12/2014
Delisted after not meeting TSX requirements
U.S. Silver Corporation
USA
31/12/2014
Taken over by Scorpio Mining (SPM.TO)
Rio Alto Mining Limited
RIO
7/04/2015
Taken over by Tahoe Res.
Paramount Gold and Silver Corp.
PZG
17/04/2015
Taken over by Coeur d'Alène
AuRico Gold Inc. (Formerly Gammon)
AUQ
3/07/2015
Merger with Alamos Gold
Revett Minerals Inc.
RVM
17/06/2015
Taken over by Hecla Silver
Tyhee Development Corp.
TDC
3/06/2015
Delisted after not meeting TSX requirements
Sunward Resources
SWD
19/06/2015
Acquired by NovaCopper
Crocodile Gold Corp.
CRK
13/07/2015
Merged with Newmarket Gold (new ticker: NGI)
SilverCrest Mines Inc.
SVL
7/10/2015
Acquired by First Majestic Silver
Temex Resources Corp.
TME
21/09/2015
Acquired by Lake Shore Gold
Arian Silver Corporation
AGQ
1/12/2015
Delisted (only London and pink sheets)
Niogold Mining Corp.
NOX
10/03/2016
Acquired by OBAN Mining Corp / Osisko 2.0
Lake Shore Gold
LSG
7/04/2016
Acquired by Tahoe Resources
Claude Resources Inc.
CRJ
26/05/2016
Acquired by Silver Standard
AM Gold Inc.
AMG
26/08/2016
Sold its exploration/development target
Mines Management Inc.
MGT
13/09/2016
Acquired by Hecla mines
Rubicon Minerals Corporation
RMX
19/10/2016
Delisted after reducing gold reserves
Agave Silver Ltd (Cream Minerals)
AGV
19/12/2016
Sold its mineral rights in Mexico
Kiska Metals Corporation
KSK
7/03/2017
Acquired by Aurico Metals
Mariana Resources
MARL
23/06/2017
Acquired by Sandstorm
Crazy Horse Resources Inc.
CZH
6/06/2017
Renamed to Rockwealth Resources and 10:1 consolidation
Integra Gold
ICG
17/07/2017
Acquired by Eldorado Gold
Exeter Resource Corp.
XRC
8/08/2017
Acquired by Goldcorp
Primero Mining Corp.
P
11/05/2018
Acquired by  by First Majestic Mining, sold its Canadian mine to McEwen Mining
Klondex Mines Ltd.
KDX
19/06/2018
Acquired by Hecla Mining
Rye Patch Gold Corp.
RPM
30/05/2018
Business combination with Alio Gold
Arizona Mining
AZ
10/08/2018
Friendly Acquired by South32
Red Eagle Mining Corp.
R
9/11/2018
Defaulted after guarantee for restructuring financing failed
Barrick Gold
ABX
2/01/2019
Merger with Randgold to form new Barrick; ticker GOLD
Randgold
GOLD
2/01/2019
Merger with Barrick; ticker maintained

The majority of the Canadian ticker symbols quote at the TSX. A few quote at the TSXV (the less regulated Venture exchange). These companies are intrinsically more risky, especially if a miner or explorer gets demoted from TSX to TSXV. One such example is TVI Pacific.

The quote list: If the Toronto Stock Exchange (TSX) symbols are less familiar, you find the mining or exploration company name next to the TSX symbol in the below list, former names are indicated between brackets:


Quote
Name
Quote
Name
AEM
Agnico-Eagle Mines Limited
K
Kinross Gold Corporation
AGI
Alamos Gold Inc
KL
Kirkland Lake Gold
AKG
Asanko Gold
LGD
Liberty Gold Inc (Pilot Gold)
ALO
Alio Gold
LME
Laurion Mineral Exploration
AMM
Almaden Minerals Ltd.
LYD
Lydian International Limited
AR
Argonaut Gold
MAG
MAG Silver Corp.
ASA
ASA Gold & Precious Metals
MAX
Midas Gold Corp.
ASM
Avino Silver & Gold Mines Ltd.
MOZ
Marathon Gold Corp.
ASR
Alacer Gold Corp.
MQR
Monarques Resources
AUG
Auryn Resources
MRZ
Mirasol Resources
AUMN
Golden Minerals Company
MSV
Minco Silver Corporation
AXR
Alexco Resource Corp.
MTB
Mountain Boy Minerals Ltd.
AZX
Alexandria Minerals Corp.
MUX
McEwen Mining Inc.
BCM
Bear Creek Mining Corporation
NDM
Northern Dynasty Minerals Ltd.
BSX
Belo Sun Mining Corp.
NEM
Newmont Mining
BTG
B2 Gold
NG
NovaGold Resources Inc.
CDB
Cordoba Minerals
NGD
New Gold Inc.
CDE
Coeur d'Alene Mines Corp.
NGQ
NGEx Resources Inc.
CG
Centerra gold
NHK
Nighthawk Gold Corp.
CKG
Chesapeake Gold Corp.
OSK
Osisko Mining Inc.
CUU
Copper Fox Metals Inc
OGC
Oceana Gold
DGC
Detour Gold Corporation
OR
Osisko Gold Royalties
DPM*
Dundee Precious Metals Inc.
ORA
Aura Minerals Inc.
EDR
Endeavour Silver Corp.
PAAS
Pan American Silver Corp.
EDV
Endeavour Mining Corp.
PG
Premier Gold Mines Ltd.
ELD
Eldorado Gold Corporation
PVG
Pretium Resources Inc.
EMX
Eurasian Minerals Inc.
ROXG
Roxgold
ER
Eastmain Resources Inc.
RRI
Riverside Resources
EVM
Evrim Resources Corp.
SBB
Sabina Gold & Silver Corporation
EXN
Excellon Resources
SEA
Seabridge Gold Inc.
FR
First Majestic Silver Corp.
SGN
Scorpio Gold Corporation
FVI
Fortuna Silver Mines Inc.
SMF
Semafo Inc.
GAL
Galantas Gold Corporation
SPA
Spanish Mountain Gold Ltd.
GBU
Gabriel Resources Ltd.
SSL
Sandstorm Gold
GCM*
Gran Colombia Gold Corp
SSRM
Silver Standard Resources Inc.
GOLD
Barrick-Randgold
SVM
Silvercorp Metals Inc.
GPG
Grande Portage Res.
TGZ
Teranga Gold Corporation
GPR
Great Panther Silver Ltd
TMI
Tri Metals Mining Corp.
GRG
Golden Arrow Res. Corp
TML
Treasury Metals Inc.
GSV
Gold Standard Ventures
TMQ
Trilogy Metals Inc.
GUY
Guyana Goldfields Inc.
TSN
Telson Resources (Soho)
GWA
Gowest Amalgamated Res.
TXG
Torex Gold
HL
Hecla Silver
TYP
Typhoon Exploration Inc.
HRT
Harte Gold Corp.
USA
Americas Silver
IMG
Iamgold
VIT
Victoria Gold Corp.
IPT
Impact Silver Corp.
WPM
Wheaton Precious Metals
ITH
International Tower Hill Mines
YRI
Yamana Gold Inc.






Related blog articles

Several more detailed articles focusing on the longer term have been published. These are using the same approach as this blog article and still are a good read to grasp the historic perspective:

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