The gold price continues to fall. At around USD 4,200 per ounce now, it is down 13% since we last updated our assumed prices. ETF outflows have accelerated, consistent with their tendency to be procyclical and the marginal buyers or sellers. Solid central bank buying partially offsets this.
Why it matters: We now assume gold averages around USD 4,400 from 2026 to 2028, from USD 4,900, based on the futures curve. However, our assumed midcycle price remains about USD 2,050 from 2030 based on our estimate of the long-run marginal cost of production.
The bottom line: With price being the biggest driver of their earnings, our gold mining coverage fair values are all lowered. They remain expensive, with shares trading from 30% to 180% above fair value as the market projects the very strong gold bull market in recent years to continue.
- No-moat Evolution’s EVN fair value estimate falls the least, by 4% to AUD 4.50 per share. Our fair values for no-moat Northern Star NST and Perseus PRU decline 5% to AUD 14.20 and 6% to AUD 3.00, respectively.
- No-moat Agnico Eagle AEM and Barrick B also each fall 6% to $87 and $29 per share, respectively, while our estimates for no-moat Kinross KGC and Newmont NEM are both reduced by 7%, to $9.30 and $67.00, respectively.
Big picture: Despite recent declines, the gold price is still up about 150% since late 2022 on worries over tariffs, geopolitical issues, Western government fiscal deficits and debt levels, and a weaker US dollar. It remains significantly above both historical prices and cost support.
- Elevated prices are driving strong merger and acquisition activity while also incentivizing organic growth. For example, Northern Star is being pressured by activist investor Elliott to sell all or part of the company.
- Agnico Eagle has expanded its presence in Finland while also accelerating growth projects, including a recent decision to proceed with its Hope Bay development in northern Canada.
