ETFdb Logo
  • ETF Database
  • Channels
    • Themes
      • Active ETF
      • Alternatives Channel
      • Artificial Intelligence
      • China Insights
      • Climate Insights
      • Core Strategies
      • Crypto
      • Disruptive Technology
      • Energy Infrastructure
      • ETF Building Blocks
      • ETF Education
      • ETF Investing
      • ETF Strategist
      • Faith-Based Investing
      • Financial Literacy
      • Fixed Income
      • Free Cash Flow
      • Innovative ETFs
      • Invest Beyond Cash
      • Leveraged & Inverse
      • Modern Alpha
      • Portfolio Strategies
      • Tax Efficient Income
    • Asset Class
      • Equity
        • U.S. Equity
        • Int'l Developed
        • Emerging Market Equities
      • Alternatives
        • Gold/Silver/Critical Materials
        • Crypytocurrency
        • Currency
        • Volatility
      • Fixed Income
        • Investment Grade Corporates
        • US Treasuries & TIPS
        • High Yield Corporates
        • Int'l Fixed Income
    • ETF Ecosystem
    • ETFs in Canada
    • Market Outlook
    • Crypto ETF Hub
  • Tools
    • ETF Screener
    • ETF Country Exposure Tool
    • ETF Database Categories
    • Indexes
    • Scenario Analysis
    • Watchlists
    • Head-To-Head ETF Comparison Tool
    • Mutual Fund To ETF Converter
    • ETF Stock Exposure Tool
    • ETF Issuer Fund Flows
  • Research
    • ETF Education
    • Equity Investing
    • Dividend ETFs
    • Leveraged ETFs
    • Inverse ETFs
    • Index Education
    • Index Insights
    • Top ETF Sectors
    • Top ETF Issuers
    • Top ETF Industries
  • Webcasts
  • Themes
    • AI ETFs
    • Blockchain ETFs
    • See all Thematic Investing ETF themes
    • ESG Investing
    • Marijuana ETFs
  • Multimedia
    • ETF 360 Video Series
    • ETF of the Week Podcast
    • Gaining Perspective Podcast
    • ETF Prime Podcast
    • Video
  • Company
    • About VettaFi
    • Get VettaFi’ed
  • PRO
    • Pro Content
    • Pro Tools
    • Advanced
    • FAQ
    • Pricing
    • Free Sign Up
    • Login
  1. Beyond Basic Beta Channel
  2. Gold Miners’ Balance Sheets Look Sturdy
Beyond Basic Beta Channel
Share

Gold Miners’ Balance Sheets Look Sturdy

Tom LydonNov 14, 2023
2023-11-14

Gold is enjoying a solid though not spectacular performance in 2023. And that’s matriculated to bullion-backed exchange traded funds, the largest of which is higher by 5.8% year-to-date.

However, the same cannot be said of gold miners and the related ETFs as both the VanEck Gold Miners ETF (GDX B+) and the VanEck Junior Gold Miners ETF (GDXJ B+) are saddled with 2023 losses. Plenty of commodities market observers are forecasting an upside for the yellow metal in 2024 and 2025. GDX and GDXJ could be credible rebound candidates.

That credibility is enhanced by the fact that many miners, particularly the larger names that dot the GDX roster, are sporting sturdy balance sheets. Investors should not overlook that trait. If anything, it should be a source of allure. In a bygone era of investing in gold producers, these companies were profligate spenders, overpaying for acquisitions and saddling balance sheets with too much debt. Fortunately, those days are long gone and GDX member firms are prioritizing fiscal health and credit ratings.

Speaking of Credit Ratings…

The improving balance sheet of miners, including GDX member firms, could position some of these companies for credit upgrades. That brings the benefit of reduced financing costs.

“Global gold producers’ 2023 sector credit outlook is stable, supported by healthy balance sheets and deleveraging capacity,” noted Fitch Ratings. “Gold producer financial metrics remain strong for respective ratings partially driven by a period of high gold prices beginning in 2020. Which drove higher shareholder returns and investment as well as stronger financial flexibility.”

A case can be made that this year, the primary stumbling block encountered by GDX and GDXJ is that real interest rates are capping gold’s gains. Specific to GDXJ, small-cap stocks, regardless of industry, are out of favor, but they’re also historically inexpensive.

In other words, should the Federal Reserve signal it’s done raising rates and if Treasury yields respond to the downside in 2024, gold could trend higher. And potentially dragging GDX and GDXJ along for the ride. Bottom line: Those factors and strong balance sheets could support rebounds for shares of gold miners in 2024.

“Fitch sees gold prices moderating but remaining elevated in 2024 and 2025 relative to our mid-cycle assumption of $1,500/ounce. Margins will be pressured given elevated costs despite cost-cutting/productivity programs but should be relatively strong for respective ratings,” concluded Fitch.

For more news, information, and analysis, visit the Beyond Basic Beta Channel.


Content continues below advertisement

Loading Articles...
Our Sites
  • VettaFi
  • Advisor Perspectives
  • ETF Trends
Tools
  • ETF Screener
  • Mutual Fund to ETF Converter
  • Head-To-Head ETF Comparison
  • ETF Country Exposure Tool
  • ETF Stock Exposure Tool
  • ETF Database Pro
More Tools
  • Financial Advisor & RIA Center
Explore ETFs
  • ETF News
  • ETF Category Reports
  • Premium Articles
  • Alphabetical Listing of ETFs
  • Browse ETFs by ETF Database Category
  • Browse ETFs by Index
  • Browse ETFs by Issuer
  • Compare ETFs
Information
  • Contact Us
  • Terms of Use and Privacy Policy
  • © 2025 VettaFi LLC. All rights reserved.

Advertisement

Is Your Portfolio Positioned With Enough Global Exposure?

ETF Education Channel

How to Allocate Commodities in Portfolios

Tom LydonApr 26, 2022
2022-04-26

A long-running debate in asset allocation circles is how much of a portfolio an investor should...

Core Strategies Channel

Why ETFs Experience Limit Up/Down Protections

Karrie GordonMay 13, 2022
2022-05-13

In a digital age where information moves in milliseconds and millions of participants can transact...

}
X