Gold Miners Report Strong Fundamentals in Q3 2023

Top gold miners around the world have reported strong financial results for Q3 2023, thanks to a combination of lower mining costs and increasing gold prices that resulted in skyrocketing profits through the third quarter of the year. Growth in the global gold industry over the third quarter was so substantial that major miners were able to overcome depletion and maintain relatively stable collective output.

Some gold stocks registered the highest-ever growth in earnings amid high gold prices that are likely to attract institutional investment to the relatively struggling gold sector.

The mining industry as a whole has struggled to attract new investment in recent years. Gold has been especially affected as rising interest rates have drawn investor interest to other interest-paying segments. However, 2022 proved to be a plentiful year for the gold sector after several central banks around the world launched a massive gold-buying spree that lasted into 2023. While the sector has struggled to raise prices in the preceding months, the outbreak of hostilities between Hamas and Israel had a positive impact on gold markets.

The ongoing conflict has left many experts worried that it could trigger a broader war in the Middle East, disrupt the oil supply chain and plunge the global economy into chaos. These fears significantly increased the safe-haven appeal of gold and drew a large number of investors to the precious metal, causing gold prices in most markets to spike.

The industry’s dominant trading vehicle is still GDX VanEck Gold Miners ETF and its whopping $11.9 billion in net assets, which surpassed assets held by the second-largest major gold miner ETF by more than 31 times. GDX is clearly the most popular trading vehicle in the gold industry. Most of its weighting consists of gold from some of the sector’s largest players.

With more than 53% of the leading gold ETF comprising of miners that produce 250k+ and 500k+, the ETF’s largest miners reported fantastic results for the third quarter of the year. Even so, mid-tier and smaller miners will likely post even better results as their smaller production bases give them more room to consistently increase their outputs. Furthermore, their smaller market capitalizations allow for their stocks to be bid at higher prices faster than their larger competitors.

The gold industry as a whole seems to be shaking off recent issues such as surging inflation and rising production costs to maximize its profits. By weathering the recent headwinds, players in the gold industry such as Freeport-McMoRan Inc. (NYSE: FCX) have demonstrated their resilience and staying power.

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