Sprott Gold Miners ETF SGDM, which offers exposure to gold stocks, has gained 31.6%, becoming the best-performing ETF of the first quarter.
Although most of the stocks in SGDM’s portfolio delivered strong returns, a few have gained more than 50%. These include Orla Mining Ltd. ORLA, SSR Mining Inc. SSRM, Gold Fields Limited GFI, Harmony Gold Mining Company Limited HMY and AngloGold Ashanti PLC AU.
Gold mining stocks and ETFs are outperforming this year, driven by a surge in gold price. Mining companies act as leveraged plays on the underlying metal prices and thus tend to experience more gains than their bullion cousins in a rising metal market (read: Gold Mining ETFs Shine Amid Market Rout).
Gold has been on an unstoppable rally and recently breached the 3,050 level. The strong safe-haven demand amid economic uncertainties triggered by U.S. President Donald Trump's trade tariff war and escalating geopolitical tensions, as well as potential rate cuts, drove the rally.
Gold is often used to preserve wealth during financial and political uncertainty and usually does well when other asset classes struggle. Additionally, the inflationary pressure caused by new tariffs will benefit the precious metal's status as a hedge against rising prices.
In the latest meeting, Fed Chair Jerome Powell kept interest rates steady and maintained the two-rate cut projections for this year. Lower interest rates will continue to support gold prices as these raise the yellow metal’s attractiveness compared with fixed-income assets such as bonds. Notably, gold is highly sensitive to rising U.S. interest rates, as these increase the opportunity costs of holding the non-yielding bullion.
Apart from these, central banks are among the major drivers of gold prices. Banks are dominant buyers of gold as they seek to diversify their reserves away from the U.S. dollar. In particular, China extended its purchases for the fourth consecutive month in February. According to the latest report from the World Gold Council, global gold demand reached a record high in 2024, driven by sustained central bank buying and growth in investment demand. Central banks accumulated more than 1,000 tons of gold for the third consecutive year (read: Gold ETFs at All-Time High as Bullion Surges Past $3000).
Let us take a closer look at the fundamentals of SGDM.
Sprott Gold Miners ETF follows the Solactive Gold Miners Custom Factors Index, which aims to track the performance of larger-sized gold companies whose stocks are listed on Canadian and major U.S. exchanges. It holds 35 stocks in its basket, with Canadian firms taking the top spot at 79.2%, followed by 18.7% in the United States.
Sprott Gold Miners ETF has amassed $321.7 million in its asset base and trades in a lower volume of around 44,000 shares a day. It charges 50 bps in annual fees from investors.
Orla Mining is primarily engaged in developing the Camino Rojo Oxide Gold Project, an advanced gold and silver open-pit and heap-leach project located in Zacatecas State, central Mexico. The stock has skyrocketed 63% since the start of the year and accounts for a 3.4% share in the ETF. It has an estimated earnings growth rate of 84% for this year.
Orla Mining has a Zacks Rank #3 (Hold) and a VGM Score of A.
SSR Mining is a mining company focused on the operation, development, exploration and acquisition of precious metal projects. The company primarily explores for gold, silver, and mineral properties. The stock has jumped 60% so far this year and accounts for a 0.4% share in SGDM’s basket. It has an estimated earnings growth rate of 185.7% for this year.
SSR Mining currently has a Zacks Rank #3. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Gold Fields is one of the world's largest unhedged gold producers, with operating mines in South Africa, Ghana and Australia. The stock has soared 55.8% and accounts for a 1.27% share in the ETF. Gold Fields has an estimated earnings growth of 40.1% for this year.
GFI has a Zacks Rank #4 (Sell) and a VGM Score of B.
Harmony Gold conducts underground and surface gold mining. It is engaged in related activities such as exploration, processing, smelting and refining. The stock has surged 54.2% since the start of the year and accounts for a 0.39% share in the ETF.
Harmony Gold has an estimated earnings growth of 10.2% for the fiscal year (ending June 2025) and has a Zacks Rank #4. It has a VGM Score of B (read: Gold (GLD) or Gold Mining (GDX): Which ETF is Better?).
AngloGold operates as a gold mining company in Africa, the Americas and Australia. The company explores for gold. AngloGold has gained 51% so far this year and accounts for a 0.94% share in the ETF.
AngloGold has an estimated earnings growth rate of 12.7% for this year but has a Zacks Rank #5 (Strong Sell).
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AngloGold Ashanti PLC (AU) : Free Stock Analysis Report
Gold Fields Limited (GFI) : Free Stock Analysis Report
Harmony Gold Mining Company Limited (HMY) : Free Stock Analysis Report
Sprott Gold Miners ETF (SGDM): ETF Research Reports
Silver Standard Resources Inc. (SSRM) : Free Stock Analysis Report
Orla Mining Ltd. (ORLA) : Free Stock Analysis Report
This article originally published on Zacks Investment Research (zacks.com).
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