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What happened

Shares of Harmony Gold Mining (NYSE:HMY) plunged on Friday morning, diving down 12% by 10:45 a.m. EST.

So what

Yesterday Harmony Gold Mining reported record quarterly revenue of $374 million thanks to high gold prices and a 10% increase in production. That combination, along with strong gold and currency hedges, yielded a profit of $97 million. In fact, hedges alone added $17 million to the bottom line during the quarter.

Therein lies one of Harmony Gold Mining's problems going forward, according to analysts at Citi, who downgraded the stock to a sell today. Citi cited rising costs and the upcoming roll-off of Harmony's currency and gold price hedges leading to "sharply lower" earnings in the future.

Another factor contributing to today's sell-off is the sinking price of gold, which was down 2.5%, to $1,234 an ounce, by mid-morning and took most gold stocks with it. Weighing on the price are the election results in the U.S., which are causing the U.S. dollar to strengthen and the price of gold to slump. These two factors are a particularly heavy weight for South African gold miners, which is why Gold Fields (NYSE:GFI) and Randgold Resources (NASDAQ: GOLD) joined Harmony and slumped sharply in recent days: 

HMY Chart

HMY data by YCharts.

Now what

The unexpected U.S. election results are causing fierce headwinds to blow against South African gold miners this week. That has analysts concerned that Harmony Gold's earnings will tumble this year because the hedges it had in place to protect against these headwinds are winding down. Due to this, Harmony and its South African gold mining peers Gold Fields and Randgold Resources could be very volatile until the market has a better feel for how the Trump presidency will impact currencies and demand for gold by investors.

This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium advisory service. We’re motley! Questioning an investing thesis -- even one of our own -- helps us all think critically about investing and make decisions that help us become smarter, happier, and richer.