Gold Miners Top S&P 500 Sectors in Q3 Despite September Slump
Despite a tough September for gold, with a 6.3% drop in price, gold mining stocks still managed to outperform every sector in the S&P 500 during Q3. The NYSE Arca Gold Miners Index delivered a total return of 17.4% for the quarter, beating even the energy sector, which gained 17.2%. The S&P 500 itself returned just 2.3% in Q3.
The bond market played a significant role in September's volatility. The Federal Reserve raised interest rates for the first time in over three years, and bond yields climbed worldwide. The real yield on 10-year Treasuries closed September at 2.93%, its highest level since 2008. Meanwhile, the U.S. Dollar Index rose over 2%, making gold more expensive for international buyers.
Despite the challenges, gold has historically faced similar conditions without long-term declines. Central banks, particularly China's, continued to buy gold, with China adding over 20 tonnes in August. Everyday investors also held firm, with U.S.-listed physical gold ETFs taking in $3.8 billion in September.
Gold mining stocks have been strong performers over the past five years, with the NYSE Arca Gold Miners Index returning about 240%, compared to 137% for the price of gold itself. Yet, these stocks remain overlooked, making up only about 2% of global stock markets. Insiders seem to recognize the value, with large miners bidding for one another, including a $27 billion offer for Northern Star.