Mid-Week Macro (2/11/2026)
Mid-Week Macro
The stock market has been steady this week, remaining just below 7,000 and just below an ATH. This has allowed gold ($5060) and silver ($83) to remain strong. The miners (HUI) are at 885, and only 6% from an ATH. The HUI began the year at 700, so it is up 26% in 5 weeks. That’s quite a move, yet the miners remain cheap. For example, B2Gold is currently producing 1M oz with FCF margins of $2500 per oz. That is a $2.5B FCF run-rate. The market is ignoring it, giving it a 2.7 FCF multiple. That’s a joke, but it’s not alone. Sentiment remains weak.
I continue to tell you that sentiment will not improve in the gold/silver miners until the fear trade arrives. This is the last battle, and then we win the war. I remember what a fear trade feels like from 2002 to 2011. The gold/silver miners did extremely well during that decade. FCF multiples were much higher than they are today. Quality developers were valued as if they were producers. Aussie gold miners were too pricey to own. Today, nearly all producers remain cheap. Look at Newmont. Its current FCF run-rate is $15B, and on the verge of cleaning up its balance sheet. Investors will only give it a 9 FCF multiple. That’s ridiculous. It’s priced as if gold were at $3,500. Why? Wall Street doesn’t care.
When this bull market in gold/silver miners shifts into second gear, Newmont will have a 15 FCF multiple. That will be a normal valuation. Then, we will see third gear, and it will get a 20 multiple. Finally, we will see fourth gear and a 25. Let’s do the math for fourth gear (mania): 5.8M oz x ($6,500 - $2,800) = $21B x 25 = $525B (future) vs $138B (today) = 280%. Not exactly cheap, but almost a 3-bagger from here. That means we will see 5+ baggers all over the place — if gold goes to $6,500 and stays there for at least a year.
When does sentiment improve? When does the fear trade begin? My guess is that it will begin slowly and pick up speed throughout the year. I’m expecting the stock market to get stuck in a trading range at some point in the first half of this year. That will be the initial trigger. That’s when gold will become the obvious go-to trade, and the stock market will be revealed as the poser. That’s the outcome we are waiting for. Once the S&P 500 stops rising, we win. Got Gold? Got Silver? If not, you have the wrong trade.
I agree that the valuation of BTG is attractive but, I’d be interested in hearing your thoughts on the risks associated with Jihadist insurgencies in Mali and how this risk might mirror what we’ve recently seen at the Panuco mine operated by Vizla Silver (-35%)?
Great analysis as always, Don. For me, the core thesis is still the decoupling of precious metals from the S&P. That’s the long‑term structural story — even though recently I’ve noticed PMs trading more in line with the Nasdaq. Short‑term correlations come and go, but the principle doesn’t change > I’m holding strong and buying dips when I can. It’s a long road, but worth staying the course.