Home > HUI Gold Bugs Index Earnings 2004 – 2013: Market Vectors Gold Miners ETF, Goldcorp Inc., Yamana Gold Inc.
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HUI Gold Bugs Index Earnings 2004 – 2013: Market Vectors Gold Miners ETF, Goldcorp Inc., Yamana Gold Inc.

February 20th, 2013

minersJohn Townsend: Watching the HUI Gold Bugs Index of late brings to mind the saying, “if it wasn’t so funny, I’d cry” or perhaps the opposite is better, “if it wasn’t so sad, I’d laugh”.

Either saying kinda has it correct as what we are witnessing right now is extremely emotional and irrational price behavior. This kind of nonsense kinda makes me chuckle because I view it as entirely a spoof, but admittedly the drama does make me sad as I know this experience is very painful for some people.

All along I have resolved, without wavering one iota, to hold my under water mining positions for however long is required to sell each and every one at a profit. A nicegenerous profit is what I have in mind.

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But at a time such as now, I suppose that sounds pretty naive, right? I mean, everyone knows the sky is falling so what is my problem? And you know what, that’s a very fair question. After all, no one loses their shirt and still smiles about it. That just tells you there is something not working upstairs in the guy’s pee-brain.

I’ll spare you a recitation of my 2008 experience. If you have not read it and are curious, just click on the link and see what you think.

This post is going to take a different tact. I’d like to show you the earnings of the individual mining companies that make up the HUI Gold Bugs Index. And to put it in some decent perspective I worked real hard to get the annual earnings for all 16 companies from 2004 right on up to the estimated earnings for each company in 2013.

What I think you will quickly see is that this take down of the HUI Gold Bugs Index is complete emotional nonsense. Yes, I agree it is not nonsense when one looks at their account value. That is real. I know. But I’d like for you to know that it is temporary and this post will aim to show you why.

HUI Gold Bugs Index                                                                                    2004 – 2013E
Symbol
HUI%
2004
2005
2006
2007
2008
2009
2010
2011
2012
2013
1
Goldcorp Inc
GG
16.20%
0.27
0.83
1
0.62
0.56
0.8
1.37
2.22
2.03
2.16
2
Barrick Gold Corp
ABX
15.36%
0.18
0.57
1.84
1.77
1.84
2
3.32
4.67
3.82
4.46
3
Newmont Mining
NEM
10.88%
1.17
0.91
1.65
1.42
1.99
2.79
3.85
4.39
3.58
4.37
4
Harmony Gold (ADR)
HMY
5.21%
-
-
-
-0.62
7.07
-0.46
1.43
0.64
0.98
5
Coeur d’Alene Mines Corp
CDE
5.11%
-0.03
0.04
0.27
0.14
0
0.11
0.54
1.37
0.34
1.99
6
Yamana Gold Inc
AUY
5.00%
0.04
0.01
0.1
0.61
0.45
0.47
0.61
0.96
0.93
1.21
7
AngloGold Ashanti Ltd
AU
4.88%
0.83
0.76
1.77
0.99
-2.15
-0.14
2.12
3.36
2.99
4.52
8
Gold Fields Ltd (ADR)
GFI
4.80%
-
-
-
0.5
0.63
0.22
1.33
1.15
1.57
9
Randgold Resources (ADR)
GOLD
4.71%
0.19
0.6
0.69
1.09
0.82
1.14
4.07
4.64
5.73
10
Iamgold Corp
IAG
4.43%
0.05
0.14
0.39
0.19
0.36
0.5
0.76
1.08
0.89
0.97
11
ElDorado Gold Corp
EGO
4.34%
-0.03
-0.12
0.01
0.1
0.46
0.26
0.38
0.58
0.46
0.59
12
Hecla Mining Co.
HL
4.14%
0.01
-0.22
0.14
0.31
-0.07
0.13
0.31
0.44
0.13
0.39
13
Buenaventura (ADR)
BVN
4.08%
1.58
2.34
3.33
1.29
1.67
2.33
2.61
3.39
3.07
3.21
14
New Gold Inc (CN)
NGD
3.90%
-
-
-
-2
0.01
0.11
0.24
0.44
0.42
0.71
15
Kinross Gold Corp
KGC
3.85%
0.15
-0.63
0.46
0.32
0.4
0.44
0.58
0.77
0.77
0.86
16
Agnico_Eagle Mines Ltd
AEM
3.11%
0.56
0.45
1.13
1.13
0.35
0.69
1.77
1.97
2.17
2.17
100.00
4.97
5.68
12.78
6.89
6.84
19.01
19.36
32.47
28.03
35.89
divided by # stocks
13
13
13
13
16
16
16
16
16
16
Avg. Earnings per Stock
0.38
0.44
0.98
0.53
0.43
1.19
1.21
2.03
1.75
2.24

The table above lists the 16 companies that currently make up the HUI Gold Bugs Index and lists the percentage that each is weighted as a member of the index.

Three of the sixteen miners were tough to get earnings data in the 2004 – 2007 time window. I did the best I could (quickly) and provided a light green background that averaged the earnings during those years with 13, rather than the preferably complete 16 data sets.

The cumulative earnings for each year is shaded with a dark green background.

The data regarding 2013E (estimated) earnings came from today’s latest Kitco data published by Bill Matlack.

Anyway, what I see in the chart is not a single miner is projected to have lower earnings in 2013.

Imagine that.

If anything, the 2013 projections suggests miners will make more money this year than in any year in the past.

And heck, we can go into all that stuff about what percent of projected earnings come true and what percent do not come true. And then we could argue that somehow this may well invalidate my conclusion.

So let me say that I have indeed seen a percentage of miner’s earnings projections that did not come true. But my observation, having just looked at that question with all this data, is that it is not as significant as one may think. Certainly it is not significant to spoil the strong earnings projected for 2013 in light of the earnings of the past two years.

Anyway, I believe what we are seeing today is emotional nonsense. If these companies were impaired to the extent that this current hair cut is justified, that would be one thing. But I don’t see any evidence of earnings impairment. Do you?

One chart for the conclusion of this post. Let’s look at /GC - gold futures on the daily chart. The most interesting extreme on this chart is the reading on the custom money flow indicator I created. It is the top of two indicators and reading so low that I could only find about 2 other occasions that it was similar (-50+). You know, at some point the selling just gets exhausted, the negative money flow dries up, and then you know what happens, right?

The lower indicator is kinda interesting and another kitchen soup concoction of mine. What I have done is told the computer to consider the True Strength Index indicator for each of the 16 miners comprising the HUI index. But more specifically, the computer is told to weight the TSI (7,4) reading for each stock by whether it is rising or falling and whether it is above or below ZERO. I’m still working on getting the weighting just right but for now, suffice it to say that when the indicator is bright maroon a whole lot of the component stocks’ TSI readings are falling below ZERO, and when it is blue a whole lot of the component stocks TSI readings are rising above ZERO. Right now it’s not looking too hot, but that will change.

It always does.

This article is brought to you courtesy of  John Townsend From The TSI Trader.

Related Tickers: Market Vectors Gold Miners ETF (NYSEARCA:GDX), Goldcorp Inc. (USA) (NYSE:GG), Yamana Gold Inc. (NYSE:AUY).


NYSE:GDX


 

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