Gold is trading near all-time highs. Producers are carrying the strongest balance sheets they’ve had in a generation. Margins are at record levels, free cash flow is strong and management teams, by and large, are showing more discipline than this sector has historically been known for. By almost every conventional measure, the conditions for a sustained re-rating of gold equities are firmly in place.
And yet generalist investors are largely absent. The capital that could flow into this sector – that this sector deserves – is sitting on the sidelines, going into physical gold exchange traded funds, or being deployed somewhere else entirely.
It’s not skepticism about gold. It’s a lack of trust in gold equities as the right vehicle to get exposure to it.
Their fears: poorly conceived M&A; cost creep just as gold’s strength should be flowing through to earnings; fragile dividends; mediocre project development and unnecessary overhead eating into margins; and geopolitical, environmental and social risks that feel too opaque.
These fears are not irrational. They are the accumulated memory of a sector that has let investors down in the past. Acknowledging that history honestly, rather than dismissing it, is an important message.
How to build trust
There are six principles that, consistently applied, have the potential to convert skeptical capital into committed shareholders. We weren’t speaking to investors in the room. Our message was directed to management teams across this industry.
Protect gold price leverage by defending margins and resisting hedging. The primary reason investors choose gold equities over the metal is leverage to the gold price; hedge away too much of that upside and the central investment proposition is diminished.
Meet your numbers. Set guidance you can beat and then meet it or beat it, every time. A consistent track record of delivery compounds into a valuation premium. Under-promise, over-deliver is not just a communication strategy; it is a cultural signal investors read clearly.
Define value creation. State publicly what metrics you use to measure it – return on invested capital, hurdle rates, cash flow per share – and then report against them every period. If a company won’t measure it, the market won’t believe it.
Be accountable. This is a complex and risky business, and things will go wrong. The test is not whether problems arise, but how management responds when they do. Own it early, explain it clearly and show what has changed.
Keep it simple. One strategy, consistently executed. The best gold companies are boring in the best possible way. Too many jurisdictions, pivots and competing priorities are a red flag for anyone trying to build lasting conviction.
And justify M&A, then track it. Almost every company announces an acquisition with a detailed synergy case. Almost none tracks or discloses whether those synergies were actually delivered. The same applies to organic projects and their expected returns. That silence is corrosive.
Scary elite management
Management is a large component of a company’s success and the foundation of investor trust. – yet elite leadership may be the scarcest resource in the industry. We talk a great deal about tier one assets, but what this sector truly needs more of is tier one teams: operators with the skill and discipline to produce gold profitably from even challenging deposits.
Elite management means a proven track record through a full cycle, not just a bull market; operational credibility built on genuine technical and regional expertise; capital allocation discipline in both organic growth and M&A; communication that is transparent under pressure; succession depth beyond the CEO; and real skin in the game through ownership and compensation tied to long-term performance.
Right now, this sector has more companies and assets than it has great management teams to run them. Poor leadership destroys value at every stage of the mining cycle, and that is one reason we see a case for consolidation.
Why consolidate?
The case for consolidation is real, but the type of consolidation matters enormously. What we support is regional and geographic consolidation – hub-and-spoke district models where assets share infrastructure, equipment, labour and technical expertise, and where the synergies are real and achievable.
What we push back on is consolidation for scale alone. Increased cross-continent complexity, diluted management focus, synergies promised and never measured, and integration risk chronically underestimated are exactly the patterns that erode trust across the sector.
Trust is the foundation. Build it, and the capital will come.
A small allocation from the generalist pool would have large implications for the sector. Companies that earn that trust should also be able to retain shareholders through downturns if they can consistently demonstrate the ability to navigate the cycles. Over time, that is how gold mining equities can become a recognized sleeve in global portfolios rather than something owned only opportunistically when bullion spikes.
Imaru Casanova is based in New York as portfolio manager of the $1.6-billion Van Eck International Investors Gold Fund.
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