Gold Stocks Have Never Been Cheaper

From Goehring & Rozencwajg

This disconnect between gold and gold equities is largely explained by interest rates and the behavior of central banks. Since 2020, real U.S. 10-year interest rates have climbed from -0.40% to 2.1%. Western investors, habituated to offloading gold in response to rising real rates, have acted predictably. From 2020 to 2024, gold ETFs shed 31 million ounces, or 25% of their holdings, as investors sold both bullion and equities. The largest gold stock ETF, the GDX, experienced consistent outflows amounting to nearly 20% of its assets. This is reminiscent of past cycles; between 2012 and 2015, as real rates rose from -0.20% to 0.80%, gold ETFs liquidated 36 million ounces.