Gold Equities Underperforming Gold and Silver Prices This Year

Gold Outshines Silver, but Gold Equities Struggle in Q3 2024

Gold prices have significantly outperformed silver in the third quarter of 2024, although gold equities have not kept up with the performance of either metal year-to-date, according to analysts at Bank of America.

In the third quarter, gold prices surged by 14%, reaching an all-time high of $2,672 per ounce on September 26. Meanwhile, silver prices increased by 8%, but they remain 1.7% lower than their 2024 peak of $32 per ounce, which was achieved in late May.

Bank of America attributes silver’s weaker performance to declining industrial demand. Gold’s strong quarterly performance, on the other hand, has been driven by increased purchases from central banks and buying from Asian consumers, along with a reversal in global gold ETF flows from selling to buying, triggered by the U.S. Federal Reserve’s first interest rate cut in years.

Despite the favorable performance of the metals, the bank notes that gold equities have underperformed. Year-to-date, gold has increased by 29% and silver by 33%. However, the S&P/TSX Global Gold Equity Index has only risen by 32%, while the Philadelphia Gold and Silver Equity Index has gained 29%, both indexes down 3% from their peaks in late September.

Among the top-performing gold equities, IAMGOLD saw a remarkable increase of 109%, followed by New Gold at 103%, Kinross Gold at 56%, Agnico Eagle Mines at 49%, and Alamos Gold at 48%. Conversely, underperformers included SSR Mining with a decline of 45%, B2Gold with a slight gain of 1%, Endeavour Mining at 7%, Barrick Gold at 12%, and Franco-Nevada at 13%.

Mid-tier gold equities showed positive momentum in the third quarter, with both the S&P/TSX Global Gold Equity Index and the Philadelphia Gold and Silver Equity Index rising by 18%. New Gold led this segment with a 52% gain, followed by IAMGOLD at 41% and SSR Mining at 32%. Underperforming stocks in this category included Franco-Nevada and Triple Flag Precious Metals, each with gains of just 6%.

In summary, while precious metals have experienced a notable rally, gold equities have struggled to maintain the same momentum, particularly in the earlier parts of the year.