Canaccord’s Currie sees gold price fuelling M&A

Gold’s pullback from highs in February has trimmed one of mining’s hottest trades, but Canaccord Genuity senior investment adviser Cam Currie argues the pause has done little to dent the case for precious metals equities.

The senior miners now carry stronger balance sheets, richer margins and more financial discipline than in past cycles, yet many still trade at valuations he sees as too low for a sector generating record cash.

Speaking with The Northern Miner Podcast Host Adrian Pocobelli in mid-May, Currie said the bigger story sits beyond day-to-day headlines about war, inflation or AI enthusiasm. He sees a market short of new discoveries and build-ready assets and nearing a fresh wave of consolidation as producers look to replace reserves and buy growth.

Adrian Pocobelli: It feels as though the metals complex is starting to move together again. Do you see that?

Cam Currie: I do, but I think people need to separate the stories. Copper, silver and gold are all moving for different reasons. Copper has picked up a strong AI and infrastructure narrative. If you want more data storage, more transmission and more electrification, you need copper. Silver has picked up some of that same discussion because it is a conductor. Gold is different. Gold’s narrative has gone quiet even though the price remains high.

That matters because people often lump the whole complex together and assume one macro theme explains everything. It doesn’t. Copper is riding a growth and electrification story. Silver sits between industry and money. Gold is moving more on its role as a store of value and on deeper concerns about currencies and reserves. So yes, the market may look synchronized, but the underlying drivers are different.

AP: How much weight do you put on the Strait of Hormuz and other geopolitical flashpoints?

CC: In the bigger picture, I see that as noise. I am not dismissing the risk, but I think the far more important issue is what repeated geopolitical shocks are doing to confidence in the U.S. dollar system. When countries see sanctions, asset freezes and the dollar used as a political weapon, they start thinking harder about alternatives. That has helped gold.

People looked at gold pulling back after a run and asked why it was not doing its job during a period of tension. I think that misses the point. Gold had already run hard, so some profit-taking was normal. In a broader selloff, people sell what they can, and that often means winners. But gold’s role in preserving value during uncertainty has not changed.

AP: So, you see this pullback in gold as healthy?

CC: Completely. Bull markets do not move in straight lines. They run, they pause, they consolidate and they build a base for the next move. When gold hit extreme levels and silver had a huge burst higher, that was the market getting ahead of itself. We raised some cash into that strength because it had overshot. Now you are seeing normalization.

AP: What gives you confidence in gold stocks here?

CC: Valuation first, then balance sheets. The sector spent years being criticized for poor capital discipline, weak returns and empire building. This time many senior producers have done the opposite. They have paid down debt, built cash, bought back stock and raised dividends. That shift in cash generation has materially changed the investment case.

You can see it in the multiples. A number of senior and intermediate gold companies are trading around 10 times earnings while carrying little or no debt. Compare that with much of the broader equity market, where multiples are higher and debt loads are heavier. The old view that miners are reckless stewards of capital no longer fits a lot of these companies. Yet the market still prices them as if it does.

AP: Is that why you keep stressing that investors should look at valuation, not just share-price charts?

CC: Exactly. A stock can look as though it has had a strong run and still be cheap if margins and cash flow have risen much faster. A company mining gold at something like $1,500 to $1,700 an oz. while the metal sells far above that is generating extraordinary margins. That changes what the business is worth.

AP: Miners are buying back stock. Barrick just approved a large repurchase plan. Do you like that, or would you rather see them buying assets?

CC: Buybacks make sense right now because boards are trying to prove they have learned from the last cycle. They know investors want discipline. They know the market rewards returning capital. So, buybacks and dividends are part of that message. I understand it and I support it.

But those same buybacks tell you something else. They tell you the pipeline is thin. These companies need growth. They need reserve replacement. Every year they mine ounces, they have to replace those ounces. At some point boards will face pressure to do deals. That is why I think M&A becomes a bigger story from here.

We are already seeing signs. Rupert Resources (TSX: RUP) drew a substantial premium. G Mining Ventures (TSX: GMIN; US-OTC: GMINF) moved on G2 Goldfields (TSX: GTWO; US-OTC: GUYGF). Equinox Gold (TSX, NYSE-A: EQX) and Orla have come together. Those are not random events. They show what happens when quality assets are scarce and producers start to think several years out. Scarcity drives premiums.

AP: Where are you focusing inside that trade?

CC: Developers. That is where I think some of the best value sits. A producer might trade around one times net asset value. A developer can trade at a fraction of that, sometimes around 0.2 times. In plain language, the market is giving that future mine a steep discount because it still has work to do on permits, studies, financing and construction risk.

AP: You have talked for years about a copper breakout. What do you make of the market now?

CC: The supply side is still the whole story for me. Big copper mines in Chile and Peru are aging. New giant projects take years, often a decade or more, to permit, finance and build. Capital costs are enormous. At the same time, the world keeps adding uses for copper through electrification, grid upgrades and now AI infrastructure.

Even if we do get a recession scare, I do not think that changes the long-term setup much. There may be periods when copper equities get hit with the rest of the market. That can create opportunities. But the structural issue remains: there has not been enough money going into the ground, and there are not enough new projects ready to fill the gap. That is why I think copper is still in a strong long-term cycle.

AP: You still see recession risk though?

CC: I do. Parts of the economy look weak even as the AI winners and a handful of megacap stocks make the market look healthy. You can have both at once for a while. Add in rising debt, pressure on long-term rates, supply-chain risk and energy shocks, and there is a lot that could still go wrong in the wider system.

That is one reason I remain constructive on gold. Gold does not need every risk to hit at once. It just needs investors and central banks to keep asking the same question: what do I want to own when debt is rising, confidence in fiat systems is under pressure and the geopolitical backdrop keeps getting messier? Gold answers that question better than most assets.

AP: What about battery metals, especially lithium?

CC: I’m bullish. Lithium overshot badly in the last cycle, then collapsed. That reset created opportunity. What stands out now is how strategic the metal has become. China controls most of the supply chain. The U.S. produces very little. That is not a comfortable position for Washington if it wants secure domestic supply of critical minerals.

The second piece is power storage. People think about lithium only through electric vehicles, but data centres and AI need stable power. If demand surges at certain hours, the grid needs help. Battery storage is part of that solution.

AP: What excites you most right now?

CC: The mix. I like holding large positions in companies that are already generating strong cash flow, because I think their fundamentals can withstand a pullback in metal prices. But I also like going fishing for discovery and takeover stories. That is where the big re-ratings happen.