Stagflation trade favors gold miners
The guest argued that a slowing economy combined with sticky inflation and reduced deficit spending post-midterms creates a highly bullish environment for gold miners.
The argument
The guest expects a transition to slower growth and sticky inflation (stagflation) as political shifts force fiscal controls. He noted that gold miners are currently trading at attractive valuations with strong free cash flow yields of 7% to 9% and active stock buybacks.
The thesis, stress-tested
✓ What validates it
- ✓Agnico Eagle Mines or GDX reporting sustained or rising free cash flow yields on upcoming earnings calls
- ✓A post-midterm reduction in US federal deficit spending
▸ Risks discussed
- ▸A failure of fiscal controls to materialize post-midterms
- ▸A sharp decline in gold prices
Hear it yourself
"You're you're really gonna see a fiscal, control put up put in Washington. In other words, less deficit spending, slower growth, sticky inflation, and and that's a a really good recipe for, AgniCoEagle, AEM equity, GDX, and the gold miners."
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