There’s a price too high to pay for any asset. And investors can find themselves tricked into buying great assets for even greater prices.
As I’ve been saying for the past few months, the value is not in gold miners. Yes, I know they’re gushing cash. Many of the majors are reporting record revenues and cash flows, piling up cash at a historic pace.
But we’ve also seen the price of gold majors soar over the past two years.
The value just isn’t in the majors right now. I rang the warning bell to buy majors like Newmont in early 2025. If you have a time machine, by all means: go back to early 2025 and load up on Newmont.
But you need to know: the next step of the gold bull will not be like the last one.
You can’t buy Newmont at early 2025 prices – but you can buy what Newmont wants to buy in 2027, today.
I’m not saying this to brag – I want you to understand how much money you can make if you get in early on a massive bull market in gold: Warren Buffett’s best stretch across sixty years never broke 36% a year… my top-performing portfolio returned 216% a year, compounded. Put $10,000 in at the start of 2024 and today it’s worth about $131,000. I’m not smarter than Buffett — I just understand one thing he doesn’t track: what happens to the best small miners when a bull market hits its buyout phase.
Go here to see where I’m putting money now.
Gold majors are doing well… and they’re mining gold as fast as they can to take advantage of higher prices.
But as fast as they mine their gold, they eventually need to refill their reserves by buying gold juniors at a similar pace.
The cash is going to start burning a hole in the pockets of these gold majors, not because they’re feeling flush as a sailor on payday, but for a much more desperate reason: they MUST replenish reserves, or they run the risk of mining themselves out of business.
Being a gold mine exec for a gold major is nice work if you can get it – but if you run a company while it mines all of its gold, you are also out of a job, and even worse: no corporate board will hire you again once you are known as the exec who mines a company out of business.
The cash from gold majors is eventually going to have to be used to buy smaller gold companies. Yes, in theory these majors could explore for and develop their own gold mines, but there’s just not enough time.
Gold mines take 10-15+ years to develop from discovery to first production. Economic deposits are in decline. There’s no time for majors to go back to the drawing board. They need projects in development today – within five years of production.
That’s exactly where the bulk of my research takes me: finding smaller companies that are within that five year window. Most of these companies will absolutely be acquired in the coming years. I’ve already seen more than 10 companies in my portfolio acquired in the past two years.
But these deals are only getting richer. The bid is going to rise. And gold majors’ cash balance is going to evaporate quickly.
You can put yourself into a very advantageous spot by taking an ownership stake in smaller companies now.
Best,
Garrett Goggin, CFA, CMT
Lead Analyst and Founder, Golden Portfolio
