The Direxion Daily Junior Gold Miners Index Bull 3x Shares and the Direxion Daily Gold Miners Bull 3X Shares fell 19.3% and 22.8%, respectively yesterday hitting 52-week lows. For the most part, that points to mines and prospects in commodity-based economies such as Australia, where gold’s plunge has been offset by a weaker currency that has boosted returns for domestic miners.
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Since 2011, however, gold has consistently sunk and gold mining companies have tumbled even more. But the Market Vectors Gold Mining ETF has tumbled by 79% since its 2011 top. The Market Vectors Gold Miners ETF, which tracks an index of gold mining companies, fell by 10.6% on Monday and is now down 25% in 2015.
Gold mining stocks have been pummeled this year as the industry, which is still trying to de-leverage, has been caught off-guard by a sliding gold price.
Freeport-McMoRan, a producer of gold and copper, fell 4%. The price of the yellow metal has remained under pressure for the past 24 hours and is now trading at $1,106 per ounce, only $30 away from a new five-year low.
Barrick Gold (ABX) dropped 14.2% to $7.55, while Goldcorp (GG) fell 10.4% to $13.16. The carnage, which has gone on for years, has hit both big and small gold mining companies.
Evolution received an average gold price of $1,533 an ounce in the June quarter, down slightly from the March quarter but still higher than the year average. While the U.S. dollar denominated gold price is down more than 40 per cent from its September 2011 peak, gold has only fallen about 20 per cent in Australian dollar terms.
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“It’s a combination of factors: softer Chinese gold demand, the rising USA dollar and what we’ve seen this morning being compounded by the triggering of a number of stop losses”, said Tim Schroeders, a portfolio manager who helps oversee about $1 billion in equities at Pengana Capital Ltd.in Melbourne.
