Speaking with Silver Investing News last week, Andrew Chanin, co-founder of the PureFunds ISE Junior Silver ETF (ARCA:SILJ), said that since the end of December, silver mining stocks, “much more so than the underlying commodities that they’re mining, [have] seen an incredible rebound.”
Unsurprisingly, the same can be said for gold stocks. Indeed, an article published yesterday in The Wall Street Journal states that gold miners are now back in favor having spent “years in the shadow of gold.” Case in point: the NYSE Arca Gold Miners Index (INDEXNYSEGIS:GDM) is up 26 percent so far this year, while gold has risen just 8.9 percent.
Responsibility for the rally is being placed on tension in Ukraine and the Middle East, which has “prompted fund managers to pile back into relatively safe investments like gold,” pushing the yellow metal’s price up in the process. As a result, companies that mine gold are now “garner[ing] more revenue and profit.”
Of course, for investors the question is how to benefit from gold miners’ good fortune. One way to do so is by investing in the Market Vectors Gold Miners ETF (ARCA:GDX), which “seeks to replicate as closely as possible, before fees and expenses, the price and yield performance of the NYSE Gold Miners Index.”
Here’s a brief look at its top five holdings as of June 30, 2014.
1. Goldcorp (TSX:G,NYSE:GG)
Vancouver-based Goldcorp bills itself as one of the fastest-growing senior gold producers in the world, and it’s not hard to see why. The company’s operating assets include four mines in North America, three in Mexico and three in Central and South America, while it has a “solid pipeline” of projects located in Argentina, Canada and Chile.
The company recently reported its Q2 financial results, commenting that it sold 639,500 ounces of gold on production of 648,700 ounces. Meanwhile, its revenue for the quarter came to $1.1 billion, with adjusted net earnings clocking in at $164 million, or $0.20 per share. Just today, Goldcorp announced its eighth monthly dividend payment for 2014; it came to $0.05 per share.
2. Barrick Gold (TSX:ABX,NYSE:ABX)
Like Goldcorp, Barrick, whose goal is to become the world’s best gold mining company, has projects spread across a variety of jurisdictions. Its cornerstone mines are Cortez and Goldstrike in Nevada, Peru’s Lagunas Norte, Veladero in Argentina and Pueblo Viejo, located in the Dominican Republic.
Barrick produced 1,485,000 ounces of gold and 67 million pounds of copper in 2014′s second quarter. Its revenue came to $2.4 billion, while adjusted net earnings came to $159 million, or $0.14 per share. The company declared today a quarterly dividend of US$0.05 per share.
3. Newmont Mining (NYSE:NEM)
Newmont, which has operations in seven countries, is primarily a gold producer. It is the only gold company that’s included in the S&P 500 (INDEXSP:.INX) and Fortune 500.
During Q2, the company produced 1.2 million ounces of attributable gold and 20,000 tonnes of attributable copper, achieving adjusted net income of $101 million, or $0.20 per basic share. Its quarterly dividend came to $0.025 per share of common stock.
In addition, Newmont recently announced plans to invest in developing the Suriname-based Merian gold mine. Pending receipt of a Right of Exploitation from the country’s government, it should start operating in late 2016.
4. Silver Wheaton (TSX:SLW,NYSE:SLW)
Silver Wheaton is the world’s largest precious metals streaming company. Put simply, that means it has agreements in place that give it the right to buy “all or a portion of the silver and/or gold production, at a low fixed cost, from high-quality mines located in politically stable regions around the globe.”
The company’s Q2 results are due out on August 13.
5. Franco-Nevada (TSX:FNV,NYSE:FNV)
Similar to Silver Wheaton, Franco-Nevada is a gold royalty and streaming company; as such, it does not operate mines, develop properties or conduct exploration. Company highlights include the fact that it has “substantial cash with no debt.”
During Q2, it earned 64,734 gold equivalent ounces, achieving adjusted net income of $36 million, or $0.24 per share. Most recently, Franco-Nevada and Sandstorm Gold (TSX:SSL,NYSEMKT:SAND) entered into a US$120-million stream financing agreement with True Gold Mining (TSXV:TGM). The money will help fund True Gold’s Karma project in Burkina Faso.
More to come
Stay tuned for an overview of the top five holdings of the Market Vectors Junior Gold Miners ETF (ARCA:GDXJ).
Securities Disclosure: I, Charlotte McLeod, hold no direct investment interest in any company mentioned in this article.