Gold just hit new all time highs of $3,581 an ounce yesterday morning. But if you're reading headlines from major establishment news outlets and you might be left feeling like gold just won Miss Congeniality at a beauty pageant.
A Tweet from Axios (an “independent” news agency based in Arlington, Virginia that was acquired in 2022 by media conglomerate Cox Enterprises for over $500 million):
"Gold is the carpenter on the sailboat—helpful in a leak, dead weight otherwise."
Reuters wrote:
“Gold prices extended their record run on Wednesday, as persistent market uncertainty and growing investor confidence that the U.S. Federal Reserve will cut interest rates this month lifted demand for the safe-haven metal.”
MarketWatch reported:
“Gold futures set a fresh record high on intensifying concerns around the U.S. Federal Reserve’s independence, mounting interest-rate-cut bets and tariff uncertainty.”
It’s as if the market woke up yesterday and decided that rate cut uncertainty was enough to push gold to all time highs out of the blue. Nothing to see here: just a boring, inert, yellow metal that doesn’t do anything, hitting all time highs because of Federal Reserve interest rate uncertainty? Right.
No mention of decades of foolhardy monetary policy, interest rate shenanigans, ZIRP, QE, bailouts, stimulus checks, forever war and endless government waste that apparently even the world’s greatest business man Elon Musk couldn’t do much to stop.
The foundation of record high gold prices was built long before Trump began bickering with the Fed about interest rates.
And this cluelessness from the mainstream media only underscores where we are in this current bull run. These media outlets will only tell you to buy gold investments at the worst time.
We’re still relatively early. And while I believe that gold will be much higher over the ensuing years, my job is to focus on undervalued gold stocks that provide leverage to the underlying metal.
Part of the problem with most gold stocks in particular is that when the price of gold rises, it’s usually the case that gold miner costs rise in tandem.
That’s because the same forces of inflation/currency debasement/easy money policy that cause investors to seek shelter in gold, also cause investors to bid up the price of diesel, rubber, steel, wages and coal – which are all cost inputs for gold miners.
This chart shows gold production and All-In-Sustaining-Costs for Q1 2025 for some of the largest publicly traded gold miners. You can see that many of these companies have AISC inputs that dwarf their production increases. Even with higher priced gold, they’re treading water. If your cost to mine gold goes up 20%, and the price of gold is up 20%, it doesn’t help your bottom line to mine 20% more gold.
Half of these companies mined less gold in Q1 2025 than they did in Q1 2024 – and 13 out of 18 saw their costs rise.
So it’s not enough to simply note that gold is priced higher and to therefore buy gold stocks that are lagging gold’s move. Most of those gold companies are lagging because they’re seeing their overhead costs balloon along with gold.
That’s why almost all of the companies I cover are pre-production miners or royalty firms that have no mine-related overhead.
I’m looking ahead to the total likely value of a mine before a company starts producing gold.
You’re going to start to hear some of these big-brain analysts like Jim Cramer and others get really bullish about some of the worst gold stocks ever. And some of them will actually look smart for a while, because as we know: a rising tide in this kind of market can lift all boats.
But I urge caution. Most of these gold miners do not deserve your attention, let alone your capital. Stick with my work on deeply discounted, preproduction gold stocks – and royalties. That’s where the value will be in the coming years.
Best,
Garrett Goggin, CFA, CMT
Lead Analyst and Founder, Golden Portfolio