Investors usually care about basic things for example how much revenue and income companies earned when they report quarterly results. After all, these are essential foundations to valuing a stock.
But in the case of Canada\’s gold industry, they have become largely irrelevant.
The second-quarter earnings season for the gold miners begins Wednesday afternoon, and experts said there will be little-to-no interest in the particular profits. Instead, all of the focus will be on liquidity and the overall health of balance sheets.
\”It\’s going to be about who\’s most aggressive in attempting to defend their balance sheets,\” said Greg Taylor, portfolio manager at Aurion Capital.
This is a direct result of the recent chaos within the gold market.
Gold averaged just below US$1,200 an oz in the second quarter, which ended June 30. But it subsequently crashed to below US$1,100 in July as a result of strong U.S. dollar, that is rising on expectations that the U.S. Federal Reserve will raise rates of interest this year.
The drop has squeezed liquidity over the gold sector and sparked a panic or anxiety in head offices. Share prices happen to be destroyed.
Gold miners have stayed quiet through the recent market volatility – although they\’re in quiet periods in front of earnings releases, they\’re probably shell-shocked as well – so investors will be reading their earnings statements very carefully to see the way they plan to manage the downturn and maintain their margins.
Experts said everything ought to be on the table: adjusting mine plans, shelving new projects, finding more efficiencies, deferring capital spending, halting exploration, modifying debt obligations and cutting dividends.