How are gold stocks performing amid high inflation & rate hike fears?

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How are gold stocks performing amid high inflation & rate hike fears?

 How are gold stocks performing amid high inflation & rate hike fears?
Image source: © Flynt | Megapixl.com

Highlights:

  • Newmont Corporation's (NYSE: NEM) net sales were US$ 3.5 billion in Q2 FY22.
  • Royal Gold, Inc. (NASDAQ: RGLD) had a P/E of over 22.
  • Equinox Gold Corp. (AMEX: EQX) produced 120,813 ounces (oz) of gold in Q2 FY22.

Newmont Corporation (NYSE: NEM), Royal Gold, Inc. (NASDAQ: RGLD), SSR Mining Inc. (NASDAQ: SSRM), NovaGold Resources Inc. (NYSE: NG), and Equinox Gold Corp. (NYSE: EQX), are among the leading players in the gold industry.

The equity market has come under pressure this year due to the climbing inflation, geopolitical tensions, and higher interest rates. Several investors have turned their focus to other forms of investments amid the topsy-turvy condition in the stock market.

Some analysts believe that investors generally explore gold-related stocks during such market conditions, as gold is considered a hedge against inflation.

As 2022 has been a surprising year for the equities markets, let's see how the gold stocks are performing:

Newmont Corporation (NYSE: NEM)

Newmont has been one of the leading gold mining firms trading publicly since 1925. The company's stock came under pressure this year with the soaring interest rates and other uncertainties in the market.

The NEM stock fell more than 26 per cent year-over-year (YoY) through August 26 while declining above 31 per cent in the running year. Its price fell nearly 29 per cent in the current quarter.

The stock of the Denver, Colorado-based firm touched its 52-week low of US$ 42.74 on August 29 and kept sliding on the afternoon session of August 30. It hit its 52-week high of US$ 86.37 on April 18, 2022.

The RSI of the gold mining firm was about 28 at the time of drafting, Refinitiv data showed. The RSI swings between 0 to 100, and according to some analysts, RSI between 0 and 30 indicates that a stock is in an oversold condition.

The US$ 33.53 billion market cap company had a dividend yield of 5.09 per cent, and its P/E ratio was 42.83.

Newmont's total sales in the second quarter of fiscal 2022 declined to US$ 3.05 billion from sales of US$ 3.06 billion in the year-ago period. Its net income attributable to stockholders also deteriorated to US$ 387 million in Q2 FY22, from an income of US$ 650 million in Q2 FY21.

It had announced a second-quarter dividend of US$ 0.55 per share of its common stock, which remained consistent with the previous seven quarters. The dividend would be payable to Newmont stockholders on September 22 this year.

Royal Gold, Inc. (NASDAQ: RGLD)

Royal Gold is a leading metals and royalty firm focusing on acquiring and managing metal streams and other related aspects. The US$ 6.19 billion market cap firm had a P/E ratio of 22.47, and its dividend yield was 1.45 per cent.

The firm's stock also witnessed a rocky journey in 2022 amid a flurry of macroeconomic tailwinds. The RGLD stock witnessed a fall of about 15 per cent YoY while declining about 10 per cent year-to-date (YTD). In the ongoing quarter, its price fell more than 11 per cent.

Royal Gold had an RSI of about 31, according to Refinitiv data. Some analysts believe the RSI range between 30 and 50 suggests a highly volatile stock condition.

Royal Gold's revenue was US$ 146.44 million in Q2 FY22, relatively down from US$ 168.02 million in Q2 FY21. The net and comprehensive income attributable to common shareholders of the Denver, Colorado-based company was US$ 71.14 million in Q2 FY22, down from US$ 81.67 million in Q2 FY21.

SSR Mining Inc. (SSRM) Q2 FY22 VS Q2 FY21 earnings highlightsSource: ©Kalkine Media®; © Canva via Canva.com

SSR Mining Inc. (NASDAQ: SSRM)

SSR Mining is a producer of gold, silver, copper, etc. Touching its 52-week low of US$ 13.94 on August 29, the SSRM stock fell more than 16 per cent YoY. On a YTD basis, it fell about 23 per cent, and on a quarter-to-date (QTD) basis, it slumped nearly 19 per cent.

As per Refinitiv data, SSR Mining had an RSI of about 26. It had a P/E ratio of 9.61, and its dividend yield was 1.98 per cent.

The revenue of the Vancouver, Canada-based firm was US$ 319.58 million in Q2 FY22, down from US$ 376.95 million in Q2 FY21. Its net income totalled US$ 67.51 million in the fiscal 2022 second quarter, a decline from US$ 77.79 million in Q2 FY21.

NovaGold Resources Inc. (NYSE: NG)

The Canadian gold mining firm holds a market cap of US$ 1.49 billion. The NG stock fell over 36 per cent YoY while falling about 34 per cent YTD and over six per cent QTD. It had an RSI of about 38, Refinitiv data showed.

In the latest quarter, NovaGold's net loss deteriorated to US$ 14.97 million, compared to a loss of US$ 10.52 million in Q2 FY21.

Equinox Gold Corp. (NYSE: EQX)

Equinox is a gold ore mining firm based in Vancouver, Canada. Its stock also travelled through a similar path to the above-mentioned gold stocks.

The EQX stock tumbled over 46 per cent YoY while slipping at the same rate in the current year. In the ongoing quarter, the stock of the gold mining firm plummeted by nearly 20 per cent.

It had also touched its 52-week low of US4 4.76 on August 29, 2022, while extending its losses on August 30. Its RSI stood at 31, according to Refinitiv data.

During its second quarter fiscal 2022 earnings release, Equinox said it had produced 120,813 ounces (oz) of gold while selling 120,395 oz. Its average selling realized gold price was US$ 1,856 per ounce.

Meanwhile, the Vancouver, Canada-based firm posted a revenue of US$ 224.6 million in Q2 FY22, down from US$ 226.2 million in the year-ago quarter. Equinox posted a net loss of US$ 78.7 million in the latest quarter against an income of US$ 403.7 million in the year-ago quarter.

Bottom line:

The hawkish signal from Fed Chair Jerome Powell in a speech after their annual meeting in Jackson Hole also weighed on the market, sending the prices of the metals further down.

Mr Powell indicated that the central bank would tighten the monetary policy "for some time" to bring inflation under control.

Newmont Corporation (NYSE: NEM), Royal Gold, Inc. (NASDAQ: RGLD), SSR Mining Inc. (NASDAQ: SSRM), NovaGold Resources Inc. (NYSE: NG), and Equinox Gold Corp. (NYSE: EQX), are among the leading players in the gold industry.

The equity market has come under pressure this year due to the climbing inflation, geopolitical tensions, and higher interest rates. Several investors have turned their focus to other forms of investments amid the topsy-turvy condition in the stock market.

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