What happened
Gold stocks sizzled this week, and although stocks across the industry rallied, one look at the weekly performance revealed an interesting side of things: Small-cap, mid-cap, and lesser-known names surged the most and outperformed their larger counterparts.
For perspective, here's a list of some of the best-performing gold stocks for the week as of 12:30 p.m. ET Friday, according to data provided by S&P Global Market Intelligence.
- DRDGOLD (DRD 2.97%): Up 22.1%.
- SSR Mining (SSRM 6.88%): Up 17%.
- IAMGOLD (IAG 4.18%): Up 15.4%.
- Harmony Gold (HMY 3.35%): Up 13.4%.
- Seabridge Gold (SA 3.87%): Up 12.2%.
- Equinox Gold (EQX 3.82%): Up 14.1%.
After this week's rally, DRDGOLD has also emerged as the top-performing gold stock of 2023 so far -- it's up a staggering 75% this year, as of this writing. No, the company didn't announce any financial or operational update this week. In fact, SSR Mining and Equinox Gold were the only stocks among these six to release earnings this week.
So why did investors jump into these gold stocks over the past few days? You may have already guessed: the price of gold.
So what
Gold prices shot up to record highs of $2,085.4 per ounce this week, even as the stock markets fumbled on the back of the turmoil in the banking industry and renewed fears of a recession. A weak U.S., dollar, geopolitical uncertainty, and stubborn inflation have exacerbated fears.
Uncertain times like these can trigger an outflow of investors' money from equities and high-risk stocks to safe-haven assets like gold. And while there are many ways to invest in gold, gold stocks are a popular choice, which is why their share prices typically rise when gold prices go up.
For gold mining companies, every rise in the price of gold should make them more money, unless they cut production or struggle with costs. SSR Mining, which reported its first-quarter numbers on May 4, is a great example. The miner, which operates in the U.S., Canada, Argentina, and Turkey, realized $1,902 per ounce of gold on average during the quarter, up from $1,879 an ounce it realized in Q1 2022.
NASDAQ: SSRM
Key Data Points
Yet SSR Mining's revenue fell 11% year over year during the quarter, thanks to lower gold production and higher costs. SSR Mining, though, is confident of producing 700,000 or more gold equivalent ounces every year through 2025. Above all, SSR Mining was also free cash flow positive in 2022.
Equinox Gold, on the other hand, not only realized higher prices of gold, but also produced and sold larger quantities of the precious metal in its first quarter. Equinox's revenue, therefore, climbed 5% in Q1, and it turned a profit of $17.4 million versus a loss of $19.8 million in the year-ago quarter.
Aside from these two stocks, the heightened investor interest in DRDGOLD stock can be traced back to the company's last earnings report released earlier this year. For the six months that ended Dec. 31, the South African gold miner reported 6% higher revenue despite lower production, thanks to higher gold prices. Most importantly, DRDGOLD said it remained "free of bank debt," and the company also declared a dividend, marking 2023 as its 16th consecutive year of paying dividends.
NYSE: DRD
Key Data Points
Now what
Industry experts are bullish about gold and expect prices to remain high or even hit a new record this year, given the economic turmoil. Gold is a hedge against uncertainty, and it should continue to appeal to investors, especially if the banking crisis worsens. As long as these macro factors keep investors on the edge, gold stocks could continue to attract investor attention.
