While gold surged from $2,000 to a record $5,600 an ounce, mining equities barely moved — and even after bullion pulled back to around $4,000, the stocks remain stuck near their lows. Don Durrett, founder of Gold Stock Data, argues this disconnect signals the mining bull market has only just begun.
Durrett traces the setup to US fiscal strains. With the national debt around $40 trillion and growing by roughly $2 trillion each year, he believes policymakers can no longer fight inflation and support growth at the same time. “The Fed is completely trapped,” he said. Eventually, Washington will prioritize economic expansion by expanding the money supply, in his view, providing a powerful tailwind for gold over the long run.
He sees gold’s climb to $5,600 as just the first leg of a broader rally. A second leg could start in the third or fourth quarter, lifting gold to about $5,500 by year-end and silver to between $80 and $100. Durrett also expects two Federal Reserve rate cuts this year and two more in the first half of next year, following an equity market correction.
For mining investors, Durrett points to the gold-to-S&P 500 ratio as the most important gauge. At roughly 0.55, it is far below the 3–3.5 level reached in 2011 and around 6 in 1980. He believes the ratio could climb to 2, implying the S&P 500 falling to 4,000–4,500 while gold rises to $8,000–$9,000. Strong physical demand from Asia adds support: China imported 173 tonnes of gold in a recent month, India’s purchases were comparable, and total global mine output last year was only about 3,700 tonnes.
On stock selection, Durrett is cautious on explorers, saying most never turn discoveries into economic mines. He prefers producers and developers, which he argues offer greater leverage to rising gold prices. Using a $7,000 gold assumption, he estimates Agnico Eagle Mines could deliver fourfold returns, while Barrick and Newmont could rise fivefold. He buys producers only when he sees five- to eight-times upside and developers when potential returns reach at least ten times. Miners, he notes, are still near all-time lows, far from frothy.
UBS acknowledges that near-term headwinds — strong US data, higher real yields or a firmer dollar — could weigh on gold, but the bank maintains that the structural drivers remain intact. Central bank buying, rising sovereign debt and the trend toward de-dollarization continue to underpin medium-term demand for gold as a reserve diversification asset and systemic hedge. With prices having corrected and positioning reset, UBS sees an improving risk-reward profile across gold mining equities. It highlights six top picks:
The bank notes that gold, with negligible industrial use and no consistent valuation framework, makes an absolute floor difficult to pin down. Yet with structural demand drivers in place, UBS believes these six miners offer a favorable risk-reward balance at current levels.
