It’s been hard for precious metals investors to do wrong this year, but as August ends and 2025 nears, it’s fair to say one thing — 2024 has been the year of the miners.
Precious metals have been outperforming heavily as inflation fears and geopolitical tensions continue to cause concern for investors. But the miners are starting to steal the show.
Drill baby drill
The NYSE ARCA Gold Miners Index (^GDMOC) had risen to 1,111.97, an increase of 26.87% since the first trading day of the year. While gold and silver haven’t horribly underperformed compared to miners, they have been lagging as of late, with the SPDR Gold Shares ETF ($GLD) posting a 21.44% year-to-date return and the iShares Silver Trust ETF ($SLV) returning 23.74% since Jan. 1.
This wasn’t the case through the first half of 2024, when precious metals were solidly outperforming the corporations built to mine them.
This chart, provided by the New York Stock Exchange shows the year-to-date performance of the NYSE ARCA Gold Miners Index (^GDMOC). The index is up 26.87% for the year.
Huge cash flow builds confidence
Gold analyst Jeff Clark on Wednesday called for an even higher move in junior stocks, citing a notable increase in free cash flow for miners in the second quarter of 2024.
Newmont's free cash flow increased by 1,388% in Q2 2024 compared to Q2 2023. IAMGold ($IAG) was not far behind, with an 859% increase and Barrick ($GOLD) had a 440% increase.
This chart, provided by analyst Jeff Clark, shows the massive increase in free cash flow that junior mining stocks have experienced in 2024 compared to 2023.
A Decade of Struggles: Miners' Resurgence in 2024
The mining industry has experienced a rollercoaster ride over the past decade. Struggling with low commodity prices, rising costs, and regulatory hurdles, many mining companies faced significant challenges. However, the year 2024 marked a turning point for the industry, as miners began to reap the rewards of their resilience and strategic adjustments.
Effects on the rest of the industry
Clark now predicts this money will flow into the senior companies.
“We now have the impetus for that to begin,” he said. “And then it’ll move down to the developers, and then the juniors.”
Several top industry analysts have begun referring to miners as potential growth stocks, citing their excess cash flow.
Top mining performers
IAMGold has led all mining companies in gains for 2024, posting a 108.30% return after the stock moved from 2.51 in January to a current trading price of 5.27. Just behind the Toronto-based miner is Coeur Mining ($CDE), which has gained 101.84% as of Thursday prior to market open and New Gold Inc. ($NGD), which has gained 84.25% year to date.
Source: GoldSeek