Gold Drops for 2 Weeks, But the Big Gold Stock Rally Is Just Beginning
Hey gold investors! 🚨 Don’t be fooled by the recent drop in gold prices — the big run for gold stocks is just getting started. A rare divergence is playing out right now, and the smart money is already positioning for the next leg up. Let’s dive into why this could be the early stage of a massive gold stock bull market!
$Gold - main 2604(GCmain)$has closed lower for two straight weeks, yet safe-haven demand has not faded. A rare divergence is unfolding: gold prices are under pressure, but mining stocks are quietly building momentum. Some fund managers are stating plainly that the real move in gold stocks has not even started.
Last week, gold prices fell nearly 3%, marking a second weekly loss. Although the metal barely held the $5,000 per ounce level, its trend has clearly weakened — rebounds are lacking strength, and while selling pressure is not as intense as in late January, it has been enough to make markets reassess the short-term direction.
The pressure is mainly coming from the energy market. Mojtaba Khamenei, the new Iranian leader, recently sent a tough signal, suggesting that closing the Strait of Hormuz remains a strategic tool against adversaries and warning that new fronts could open if the conflict escalates. Oil prices moved higher in response, pushing up U.S. Treasury yields and the U.S. dollar index. For non-interest-bearing gold, this creates a classic double squeeze: rising real rates reduce the appeal of holding gold, while a stronger dollar compresses its valuation.
But the paradox is this: gold is falling, while gold stocks are gathering strength.
Why the Gold Stock Rally Is “Just Beginning”
Nawojka Wachowiak, Senior Portfolio Manager at Ninepoint Partners, recently gave a counterintuitive call in an interview: for equity investors, this precious metals bull market is still in its early stages.
“The most common reaction is that people think they’ve missed it,” Wachowiak said. “They see stocks up 100% or 150% and assume the move is over. But in reality, this is how these cycles start.”
She explained that the current gold rally has unfolded very differently from past cycles. The initial push did not come from stock investors, but from a wave of central bank buying that began in 2022 and continues today. Institutional and retail money did not participate in the first phase. Only in 2025, amid rising geopolitical tensions, trade disputes, and economic uncertainty, did capital begin to reprice gold’s safe-haven value. From an equity perspective, this upswing is less than a year old.
“Gold prices rose for a long time before stocks really came alive,” she noted.
The Valuation Gap: The Misalignment Between Gold and Miners
This lag has created the core contradiction in today’s market: gold remains elevated, but valuations of gold-producing companies are still near historical lows.
Mining stocks look exceptionally cheap relative to both gold itself and the broader equity market. Most large producers enjoy strong cash flow, healthy balance sheets, and even return capital to shareholders through buybacks — fundamentals that stand in sharp contrast to depressed valuations. Once valuations revert to historical averages, the upside could be substantial.
Wachowiak does not need gold prices to surge dramatically to support her view.
“I can easily see stocks doubling from here — even more,” she said. “Gold doesn’t need to double for that to happen.”
The Next Stop for Capital Flows: Starting with Small-Caps
Wachowiak believes fund flows in a bull market follow a clear path: the first wave usually goes to the largest, most liquid producers, supported by ETF inflows and institutional allocations. But the next phase of the cycle — capital spreading to smaller-cap companies — has not fully unfolded.
“Large producers are getting attention, but developers and explorers haven’t really started yet,” she said. “That’s usually where the biggest upside appears once investors become more comfortable with the sector.”
Ninepoint Partners’ strategy is built on this view: roughly half the portfolio is in producers, and the other half in developers and explorers that could become the next generation of mines. This allocation is supported by another trend: large miners are facing growth bottlenecks.
“The average mine life is about 12 years, and many companies don’t have strong project pipelines,” Wachowiak pointed out. This means they will eventually need to replenish reserves through acquisitions or investments — a dynamic that will benefit junior mining companies.
The Longer-Term Logic: The Start of a Decade-Long Cycle
Looking ahead, Wachowiak sees a structural shift underway across the entire metals and mining sector. Beyond traditional economic cycles, three forces — geopolitics, technological growth, and the global energy transition — are increasingly driving long-term metals demand.
“This isn’t a six-month opportunity,” she said. “This is a decade-long opportunity. There will be ups and downs, but the world needs more investment in metals and mining.”
For investors who think the gold bull market has already ended, Wachowiak’s message is clear:
The equity cycle for gold is just beginning.
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