Gold miners undervalued despite strong cash flows
The speakers argued that gold mining equities remain deeply undervalued and represent a compelling opportunity due to explosive free cash flow generation that has not yet been fully priced in.
The argument
Using Newmont as an example, the guests highlighted blowout quarterly free cash flows driven by rising precious metals prices. RBC valuation data further suggests that even at lower gold prices, the sector's EV/EBITDA multiples remain exceptionally low compared to almost all other market sectors.
The thesis, stress-tested
✓ What validates it
- ✓Continued blowout free cash flow in upcoming quarterly reports
- ✓Sector EV/EBITDA multiples re-rating upward toward historical averages
▸ Risks discussed
- ▸Precious metals prices falling back, compressing margins
- ▸Operational cost inflation at mines offsetting revenue gains
Hear it yourself
"We have long since taken those put options off, and and we've, you know, obviously been able to enjoy a good bit of this this rally higher. But from a pure technical standpoint, everything looks quite positive. Bid over overbought. This this upper line here is what's called the upper, Bollinger Band. It's it's a measure of two two standard deviations above this fifty day moving average. It's not a perfect science. It's just a a way to measure statistically, you know, a fairly extreme moves in a short period of time relative to some baseline, in this case, the fifty day moving average. So getting a little overbought, nothing too extreme."
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