With Trump's ongoing trade spats and a weak U.S. dollar, gold has been one of favorite refuges for investors.
On April 22, just one day after President Trump lashed out at Fed Chair Jerome Powell and demanded rate cuts to avert a slowdown, the yello metal hit its all-time high of $3,500 per ounce.
“Gold is recalibrating to reflect what can only be described as epic changes in the global financial system,” said independent analyst Ross Norman.
“And those changes are a widespread and fundamental shift in confidence in the world’s reserve currency and its bond markets.”
But while gold spot prices have gone parabolic, gold mining stocks — which typically perform in lockstep with gold — have lagged behind.
Physical gold and derivatives funds raked in $17.8 billion in 2024, the highest in five years, according to LSEG Lipper data.
Meanwhile, investors pulled $4.6 billion from gold mining funds, marking their worst year in a decade.
The skepticism that held miners back may be gone
For years, gold miners have lagged gold; not for lack of gold but because investors haven’t exactly trusted the people digging it up.
“Investors have little faith in mining executives as stewards of their capital,” analysts said, noting Wall Street wants free cash flow, not promises, as reported by The Financial Times.
Egon von Greyerz, founder of Von Greyerz AG, said physical gold remains a safer bet for many. “You hold it yourself, outside the banking system,” he said.
“Mining stocks are inside the system, and if something breaks, you might not have access.”
That skepticism may finally be fading and top gold miners are coming out of the bullion shadows.
New Gold Inc. (NGD) is up 56.3% year-to-date. Newmont Corporation (NEM) has climbed 41.4%. Barrick Gold (ABX) is up 17.9%.
“Gold mining stocks are massively undervalued today and will probably go up faster than gold,” von Greyerz said. “They’ve been standing still since the 1980s, even as gold has surged. That’s about to change.”
New Gold jumped 17.2% on Wednesday after posting strong Q1 earnings. The company reported $209.1 million in revenue, up from $192.1 million a year ago, and narrowed its net loss to 16.7% from 43.5%.
But the figure that caught investors’ attention in particular was $108 million in operating cash flow and $25 million in free cash flow, even after spending $43 million on growth.
It marked the company’s fourth straight quarter of positive free cash flow, $52 million of which came from its New Afton mine.
“The first four months of the year have been exceptionally positive,” said CEO Patrick Godin. “We increased our future free cash flow by consolidating New Afton, successfully refinanced our notes, and extended our credit facility.”
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