Can Gold & Silver Stocks Still do Well in 2026? | David Finch Ixios Asset Management Interview
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Today on resource talks, is there still money to be made in gold and silver? Are the precious metals equities getting overbought? And how should I treat valuations in uh in this stage of the market? Luckily for you though, I'm not going to be the one answering any of those questions. Uh doing all the work will be David Finch of Exxius Asset Management, a Parisbased metals focused fund. David, thank you so much for sitting down with me today. >> It's a pleasure. Yeah, it's good to talk. >> Pleasure is mine. It is good to talk. And um the market itself has been pleasant since we last spoke. Really? Um GDX, GDXJ are both up close to 200% since you were last on the pod, which was um December of 2024 if I remember correctly. >> Um was that it though? I mean, have I have like if I didn't participate, which I personally did, but if people haven't participated in this uh run, >> um have they missed it? Has the easy money has it been made? Well, look, maybe maybe the easy money has been made, but um I do think that uh valuations are incredibly reasonable still in the sector. It's not like the sector's run up and everything's become really expensive. In fact, if you look at most of the gold producers, um they're on lower multiples than they were at the start of 2025 if you put spot gold into the equation. >> Mhm. So um you know when you look at the historic charts whether it's you know EV a bit or price to NAV or free cash flow yield um they're cheaper today than they were a year ago by by a little bit um and uh I think that a lot of people are suffering a bit from vertigo because they kind of feel you know gold miners went up 150% last year I feel like an idiot buying them Now, if I don't own them already, um I kind of think that's the wrong way to to look about it to look at it. Um if you go back to the last big bull market in gold between 2000 and 2011, I think the the GDX went up by nearly 900%. So, you know, I think that uh the fact that we're up 200% from the lows is perhaps, you know, it's fantastic performance, but it's not necessarily the end of it. And I think one of the dangers in commodity markets could do move in a kind of exponential fashion is is just to to take profits far too early. U so you know I I I wouldn't be surprised to see the GDX double again this year. Um you know with gold price that's that that's gently higher. Um and you look at some of the valuations on uh let's look at um EVM at DAR at 4500 gold. Um you've got stocks like uh Endeavor on 2.8 times EVIDIDA. Um you got stocks like Elderorado 3.1 times, Fortuna 2.4 times. Um and even the kind of expensive ones in inverted commas uh like acne that's on seven times EVITA DA right so you know these are these are some of the cheapest EVbit multiples that you have in the market outside oil and gas and um I just think that what what you saw last year was a kind of mechanical reaction to the higher gold price but But you haven't had any rerating at all, right? Um in fact, you've had a slight derating in terms of the multiple. And uh just you look at a stock like Oiana Gold for instance, which has got assets in New Zealand, the US and the Philippines. So you know majority of the production from tier one jurisdictions and you know that's on a that's on a PE at spot 26 PE of six times EVID of 2.7 times and a free cash flow yield of 18%. It it's difficult to argue that these stocks are overvalued right they've gone up a lot but they they really aren't expensive. So, you know, I I think there's a lot more upside and I think that um you know, you've seen the famous chart that everybody showed, including me, um showing that during this rally, you've just had serial redemptions in um in the GDX. So, you've had people who've been stuck in this sector for a long time uh taking their money out during this rally continuously. And um I think that it's difficult to argue therefore that you know this is a massive consensus trade and that everybody's already in and that everybody's crazy bullish. I I think we're a long way away from that kind of paradigm at the moment. >> Is that the right way to look at valuations in a cyclical business though? I mean generally if you look like a PE if you if you take a PE ratio uh to mining companies they will look the cheapest when they're at the top. Yeah, absolutely. And I think you know that. So what's the market saying by according these valuations? If the market's saying anything, the market's saying um gold has peaked and there's going to be a severe reversion to the mean or they're saying that these companies are going to squander all the cash that they're making. Um they're going to do overpriced M&A. They're going to build crazy expensive mines and they're going to end up destroying all this value. >> Mhm. >> Um, and I kind of think both of those are wrong. I mean, I would say that cuz I run a gold mining fund, but uh I don't see any of the things that have driven gold higher changing in 2026. And I think that so far in this cycle um the producers have been incredibly responsible in terms of their capital management and you know every discussion I have with with management groups and producers they're you know the first thing is um to talk about cash return to shareholders and not whether they're going to do it but how how best to do it right so I think that we are um we're kind of in a in a in a in a different paradigm. I think we're still very early in the cycle and I think these stocks will get rerated over time. And to your point about cyclicality, yeah, sure, you know, steel makers tend to be on two times EVID right at the top of the cycle before steel collapses. Um do do we really think the gold price is going to collapse from here? I I kind of don't actually. So I see this as an opportunity rather than a a top of cycle kind of uh phenomenon. >> What do you think? >> What could bring us then into into the next leg up from here on out because um what brought us here is likely not going to be the same thing that brings us into into the next leg up uh or pushes us down. So yeah, what do you think is needed for a bigger move from here on out in um in the equities? So when I talk to the investors in our fund um they which is essentially private money right so it it it's family officers private wealth managers we have some institutions in the capital but not a lot um and I think that that those guys divide into two camps um and I think institutions do as well but but particularly private money um the guys have always had gold right so they've always had five to 10% of their assets in gold. Um when they get bullish, they add some gold miners to get the leverage effect. Um and you know, they they they regard that as a cornerstone of their portfolio allocation. And then you've got the other guys who are the kind of Warren Buffett guys who have never owned gold, never really thought about it. Um they don't see any reason to own, you know, a piece of metal which has got no yield and which you can't value rationally. Um and they've got zero. And I think the next leg up comes from pressure on those guys to get some kind of exposure. >> And um you know we we've seen that in our in our marketing. You know we're getting calls from guys who we've seen once a year for the past four years. They said, "Oh yeah, that's all very interesting, but we don't really like gold. We don't really see any reason to own it, so we're not going to own gold miners." And now they're coming back and you know they're getting questions from their clients about why they haven't got any gold because the guys who have got gold have been doing a lot better or gold miners. And um and I think those guys often they they will look at gold miners because there's a yield there's a valuation which they can't get with physical gold. Um and and we're certainly seeing a kind of growth in interest from those kind of people. And I think if you look at the much bigger institutional world, it's exactly the same. The vast majority of US pension funds don't have any exposure to gold. >> Mhm. >> And they certainly don't have any exposure to gold miners. >> And that's such a huge pool of capital that it it it doesn't take a you know a large majority of them to decide to make an allocation. And if 20% of them decide to put some money into gold miners, that's going to be enough to double the gold mining scent. >> You mean in terms of valuations like the you'd expect the GDX to double if that would happen? >> Yeah. >> I think it probably will in 2026. It'll double from where we were at the beginning. >> And you you don't think the gold price needs to double for that to happen? Like you don't think we need to be >> Absolutely not. No, no, no, no, no. >> I mean the gold for that to happen. that can't happen if the gold price starts to correct significantly. Uh I think that you know you've got to have a some kind of upward momentum in the gold price to to to get people to feel that they're missing out and that they need to be in the sector. But I don't think the gold price needs to double. I mean you know the leverage effect is um extraordinary in gold miners. So last year, gold went up 62% I think and our fund went up 185%. So that's kind of a three times leverage, right? >> Mhm. >> So I think you know for the sector for the sector to double mechanically without any rerating, gold has to go up another 25%. >> Which will put us at like well just under 6,000. Um, but I think that, you know, even if gold just trends upwards and it goes up gently, it goes up 15% in 2026, I think that'll be enough for the sector to double because I think that the valuations will rerate. The earnings will go up, but they'll get a higher multiple. >> I like that view because there's I don't want to turn this into a a macro podcast. I think there's plenty of those out there. Uh, but there's there's a lot of people who are going to overpromise and and underdel. They're going to claim, you know, 10 $20,000 gold and whatever, and it's going to get you the clicks. But I appreciate kind of your your uh more uh down to earth view. So, yeah, what could I reasonably expect from here on out in terms of returns over call it 3 to 5 years if the setup is what you you believe it will be? And then I suppose more importantly, what is it going to be driven by? like what are the assumptions that you're making for you know 25% this year and then on to >> I'm not making that assumption that's what I'm saying needs to happen for uh the GDX to double I think it you know I think it will happen but I think you know trying to have a a target price for gold is a fool's errand right because it it's not a commodity where you can build a supply demand model and calculate deficits or whatever right it's It's not a commodity at all, but that's another argument. But, you know, the potential supply of gold is all the gold that's ever been mined, right? Because it's all sitting in a vault somewhere or around somebody's neck or, you know, it it it's all there. And so, the potential supply is massive. And you can't model or understand at what price some guy who's got a bar of gold in a vault in Geneva is going to sell it at. Is he a seller at 6,000, at 10,000 at who knows, right? And and what will drive his decision will depend on all kinds of different factors for different people. Um and um it's the same for the demand side. Nobody actually needs to own this, right? um nobody needs it to make products or to survive or whatever. So, so it's a it's a financial or almost a philosophical decision about whether you want to own gold or not. So, you know, I think both the supply and the demand side are impossible to model in gold >> and I think anybody who pretends that they can do that, you know, killing themselves. So um I think that all you can do is look at what is driving a that's the that you know mine supply increases the world stock of gold I don't know by one and a half% a year or something. So you even if miners miraculously increase production by 30%, it doesn't really make any difference to the to the total potential supply of gold. >> And and you've just got to think, you know, are people going to continue to want to protect themselves against devaluation of fiat money, massive overindness of states, you know, all all geopolitical tension, all the all the stuff that's driven it in in 2025. Is that going to carry on in 2026? I I think so. Is it perhaps going to accelerate? Probably. Um and that's the kind of best I can do in terms of in terms of analysis of where the gold price is going. >> Yeah. >> And um you know, as for supply, are central banks going to turn around and start selling? I kind of doubt it. um you know if we have a big financial crisis typically gold has been a source of dollar liquidity and so it gets sold off uh as we saw in 2008 right um but uh I kind of think that governments are doing everything they can to avoid having a financial crisis doesn't mean they'll succeed but um you know I think it looks as if uh rates are going to get cut again next year deficits going to explode again. Uh, and I think, yeah, gold should be on an upper par >> and I think that'll be enough to rerate the sector fairly significant once people get comfortable with that trend. >> But wait, what is the philosophical take though? That's the economist take. I need the philosophical take. No, I mean it's just philosophical about not really philosophical but you know some people um believe that gold is the kind of asset ultimate asset of of refuge and some people believe that the ultimate asset of refuge is US treasuries right >> and that's that you know hence the 6040 portfolio whatever it is that most American institutions base their asset allocation off there's no place for gold in that right so >> yeah Um it and I guess that you know some of the potential buying of gold will come from people re-examining that. >> I think very few people um uh that actually might not be true but very few people around me still believe the 6040 portfolio even you know the non-investment. >> Yeah. you're surrounded by, you know, all kinds of clever people who've been looking at gold for a long time, right? Whereas, um, >> you know, if if you stand up in in a US pension fund committee meeting and suggest putting 10% of the portfolio into physical gold, you'd be pretty much an outlier. >> Yeah. The indices are seeing big inflows though as well. I mean, on a on a six-month basis, GDX um, well, not big, but inflows. So GDX has got 1.34% inflow on a six-month basis. GDXJ less than that, half a half a percent. But the silver ETFs though, so the SE and the SIGJ, they're both close to 25% more AUM um than what they were 6 months ago. So it's SL, Silj, GDX, and then GDXG in terms of the size of influence. But again, all influence. >> Yeah. I mean, the silver, you know, the silver stuff is is pretty small, right? I mean the market cap of the companies involved is pretty small and >> most of them produce more gold than silver, right? So um but yeah, you know, I think that and I bet that that's essentially retail money, right? Coming into those ETFs. It's not institutional money. >> Yeah. What is it what what is it telling you though? Is it more noise than anything else? Is there any direction that you can read out of those inflows? >> Well, they're tiny, right? And if you look at 2025 as a whole for the GDX and it was outflows, right? >> Mhm. >> Um fairly significant outflows. Um I'll send you the chart after the meeting from from from Bloomberg. But um and I think that that's just people who've been stuck in it since 2011 just getting out right finally get back to their original price. And um you know the old thing well when you buy something that goes down the psychological trap of saying well I'll sell it when it goes back up to my purchase price right and 10 years later it's got there and people say thank god for that you know I can get out of this thing. >> Yeah. How's uh how's how are inflows for you for Ixius? How are you doing? >> Look um we had some good inflows in 2025. The majority of them came in the first quarter of the year. Um, and I I would say in the in in the back half of the year, it's been relatively flat. We've seen we've seen some people taking profits um and we've seen kind of offsetting inflows into the gold funds. So, it's really been um uh I would say in the second half of the year, probably net inflows were were small positive small positive >> the energy metals fund which is our other fund you know uh that seemed that didn't see any interest in the first half of the year and big inflows in the second half of the year >> that's something that I did want to touch upon maybe toward the latter part of the conversation um that money who's it because you mentioned it's it's family funds and so on is it only professional investors that the money is coming from or are you getting any retail money in as or where's the majority of those inflows coming from? >> We've got we we've got a little bit of retail money that comes in through um you know these European life insurance kind of products um equity link life insurance products um it's very small and we and we don't really market to that client base >> um so the the vast majority of our money is I'd say probably 70% wealth management and 30% institutional >> kind of like insurance company bank kind of institutional >> and and the gold fund is is still the biggest one in terms of absolute amounts. >> Yeah, the gold fund is about 620 million I think US and the energy metals fund is about 250 million US. Oh >> okay. You do have you have you've got a copper fund as well that you just recently started last It's not a use its fund. Uh it's a it's a Luxembourg alternative investment fund and it's only got about 20 I think it's got 27 million or 28 million US in it. It's pretty small. >> Okay. Yeah. Chump change obviously. Um I knew that. Uh no, but um I remember the title last time when I spoke to you was that it's a $449 million fund. So you're about double um since since then, which is uh well not too bad uh in terms of aum. So, so good on you. What is uh what's the breakdown in the gold fund in terms of metals within it? So, gold versus silver. Again, you said silver not that easy to get exposure to. So, would it be like an 80/20 split or what's the split there? >> There's various ways of cutting that. So, uh and obviously as time's gone by most of the silver miners have acquired gold assets, right? Which is the case for Pan-American. That's the case for curve who recently or in the process of buying new gold. Um I think the only one that's actually increased its share of silver is first majestic when they bought uh bought gas. >> Um so it depends you know people refer to those as silver miners. It depends whether you count that as 100% silver which it's kind of not right. So uh and the same for the explorers often you know they they declare their asset and silver equivalent but there's a lot of lead and zinc and gold and copper and other stuff in there. Um so I think if you look at the real um exposure in terms of percentage of production in silver for the producers and percentage of the resource in in silver for explorers and developers it's probably about 10% of the fund >> right and that's just because of how the how how the the sector really is because silver is a byproduct in in general most silver companies are not silver companies like I I I dare say that most silver companies are actually probably more gold companies if uh >> most of them yeah I mean it's good if they're getting above 50% silver right >> which I mean that doesn't happen too oft just because of how silver is in the ground and then probably if that happens they're based in Mexico um one of the few places that you can find deposits that are more silver than gold still not easy to find in terms of size though >> is there um is there has any What what if if anything what has changed in your strategy? Are you taking more risk and and going more toward the juniors within the fund or are you still kind of you know keeping it developers and and producers? >> No, I mean it's that you know the fund is about I guess about 60% producers and about 40% exploration and development and probably split half and half between the two. So, >> okay. >> I mean, there's companies, you know, like I like like Skina, for instance, which I count as a developer because they've already started to build the mine even though they haven't got their permits, right? Um, and then there's the, you know, the smaller stuff, uh, well, not smaller, but earlier stage stuff like, um, like Collective, for instance, which is, you know, they're still trying to define what they've got. So, I count that as an explorer. Um so but yeah so so we I mean we have a significant exposure to the non-producing sector. Um and actually you you kind of would have thought in this bull market that that would have been the big driver of outperformance but it hasn't been actually and maybe because it's I'm not a very good stock picker in that part of the part of the thing but um you know it it's it's been you know the best performing stock in our portfolio last year was Discovery Silver which is which became a producer, right? Um and uh yeah, you know, and we probably got one or two explorers were actually ended up down. So, um you know, it it's difficult to characterize it as, you know, a mass kind of rerating of gold in the ground versus guys producing gold. I don't think that analysis really stands out. >> Mhm. Certainly not in our experience anymore. >> Yeah. >> Last time we spoke your your biggest position in that fund was Alamos if I remember correctly. What is it now? What's the biggest position now? >> It's Discovery Silver. >> Just because it's grown out and uh so you have you've not you've not have you derisked it or or gotten out a little bit. >> Yeah, we've taken some profits on the way up unfortunately. Um I mean I wish we had but um you know I think last year it was up 1,080%. So it was an 11 nearly an 11 bagger. >> Yeah. >> Um so obviously it changed statute from being a kind of pyramid challenged lowgrade silver open pit in Mexico to being a a significant producer in Canada. So um you know it wasn't uh it wasn't kind of organic that that that appreciation but yeah >> so that's a position. >> How do you know when to sell? Like what valuation assumptions do you use? Like uh is it gold price? Uh what are you looking at when it's time to uh exit or take some profits? Yeah, look, um I think the there isn't a magic formula. uh I don't think um you know uh because uh so if you look at discovery silver now it's got a relatively low free cash flow yield uh not expensive on eBar I think it's on about six times 20 26 if you use spot so hasn't become expensive yet um you know it doesn't have a high free cash flow yield because they are you know investing um in exploration and and expanding production which is kind of fine. Um and I think you know if you look at it on a on a price to uh net asset value basis um it's still I think quite cheap. So, uh, yeah, I I I kind of had difficulty selling it just cuz it's gone up a lot, right? >> Um, but we'll see >> when you're building an NPV model uh for yourself. What are the valuation assumptions you use there? Like, and do you use spot? Is that reasonable to expect? And then also discount rate. I mean, we see a lot of these uh studies have being done at 5% which is obviously not reasonable. Um, or or capex contingencies. We've seen capex blowouts a lot across the board. So what are those inputs that you use when you value miners in in this current environment? >> Um I always use spot. >> Um because that's the only gold price I'm certain of. Um I don't think there's much point using past gold prices. Um and future gold prices, who knows? So um and I think the important thing is I I use price to net asset value as a compar as a relative valuation tool not as an absolute valuation tool. >> Um so I use it to com it allows you to compare companies which have very different mind lines. Right? That's the that's the purpose of it. So I think provided you use the same discount rate and the same gold price in all your models then it kind of works for me right. >> Yeah that enables me to say you know whatever metrics I've chosen that one stock is trading at a significant discount to another. And then I think you know we were talking about this earlier um how do you adjust for jurisdictional risk um again I think that's a very inexact science right um and because you're you're you're trying to gain something um in terms of jurisdiction where jurisdictional risk is difficult to quantify and it's binary so either happens or it It's so um yeah I I I I kind of uh I I don't put a jurisdictional risk into the into the MPV model. I just do the straight MPV calculation and then kind of it's more an art than a science about working out whether it's cheap enough to compensate you for the risk or not. Right. And typically we've we've avoided that kind of we've kind of avoided extreme risk, right? Which is which has done quite nicely for us. So, you know, we uh we've not had any exposure to to to to Mali uh during this kind of meltdown and internal politics in Mali. Um, and you know, we we we we do have a small a very small exposure to the DRC, but you know, that's um a much bigger one in the Energy Metals fund because we're big holders of Alphamin, but um I I tend to try and avoid that risk unless things really become very egregiously cheap. And I think that the jurisdictional profile of something that's perceived as risky is starting to improve a bit. And uh you know jurisdictional risk changes a lot, right? It it's not a it's not a stable thing. Jurisdictions get a lot worse and a lot better um uh in in cycles. So um you know it it's something that we think about a lot. We don't like to take a lot of jurisdictional risks. That's not really what we're paid to do, I don't think, is to take a view on the geopolitics of a small African country. Um, so we tend to avoid that risk, but occasionally, you know, we we will take that kind of risk if we think it's offset by the quality of the project and the people involved in. >> Is there ever a jurisdiction premium though? And it almost sounds like a rhetoric question here giving you a previous answer, but would you ever look at something like let's say Code Devoir, which I'm very biased on it, fair disclaimer, honest confession, I have a decent chunk of chunk of my own money invested there and I just recently went there for a site visit as well. But so just looking at it from a hypothetical perspective where it's something like something like Ivory Coast is becoming, you know, kind of the flavor. >> We have some exposure to Ivory Coast, right? >> Yeah. But would you pay a higher premium? Would you ever be like, "Okay, I'm comparing these things on an EV to MPV or whatever it might be." EVITA, but Ivory Coast, I'm willing to pay, you know, 10 or 20% more. Is that something you would think about? >> Well, 10 10 or 20% more than uh >> Yeah. >> Not 10% more than Canada, right? >> Um I mean, don't forget, I mean, there was a there was a revolution in the Ivory Coast 15 years ago. People were shooting each other in the streets, right? >> Yeah. Um so which goes to my point is that juris jurisdictional perception is cyclical and um you know would we have 20% of the fund exposed to Ivory Coast? Well no to be honest. I mean we own some exploration companies there um but um it's probably three 3% of the portfolio something like that and I'm I'm kind of cool with that. What is the highest waiting in terms of uh jurisdictions in the portfolio? >> Oh, it's Canada >> by a lot. >> Yeah. >> And Australia second. >> Okay. So, you do what would the split be between TSX and ASX? >> Um, in terms of quotation, it's kind of 60 Canada, 30 uh Australia, and 10% bits of US and UK. >> Okay. Yeah, that's interesting. Uh would is that by design or did it just kind of happen that the assets that you liked were listed on the one versus the other? >> Yeah, it's kind of um I mean in the back of my mind there's a kind of um I don't want to get too out of whack with the country waitings in our benchmark. Um I think a actually in the new underlying index of the GDX Australia has been reduced I think quite a bit um because some of the Australian midcaps were kicked out of the index but Australia is probably about 20 in our benchmark. Um, so we're a bit overweight, but that's not because we own lots of Australian listed producers. It's because we got quite a lot of Australian listed exploration and development companies. But, um, yeah, I mean, I don't want to stray massively. I mean, I wouldn't have I wouldn't have it the other way round like 60% Australia and 30% Canada. And it it's not such a deep market as Canada in terms of either liquidity or the number of potential stocks you can buy. >> I think there's also limits um in terms of uh rules and regulation in terms of how much cash you can keep if I'm if I'm not mistaken or can you just choose that yourself? Could you go 50% cash tomorrow? No, I think I think I think we're we're not allowed to have more than 20% from from memory. >> Okay. So, how much >> we never had anything like that to be honest. >> Okay. >> Right. I I kind of look people give us money. All our vast majority of our investors are professional investors. They give us money to invest in gold miners because they're bullish on gold. It's not my job to say to them, you're wrong. I'm putting 20% of the funding care. >> I don't see that as my job. Right? But my job is just to buy the best gold mining companies that I can with their money. And if they get bearish on gold, well, they can take their money out of the fund. And um so I I'm not going to second guessess the people who are giving me money by holding it in cash. >> Mhm. >> Yeah. >> So, you know, we I think you occasionally when we get an inflow that we haven't yet deployed or whatever, maybe maybe we have 3% cash or something in a fund, but I don't like to go a lot more than that. >> Yeah. Would you still do it the same way if it was just um you running your own money? Would you keep more cash than that? >> Uh, no, I don't think so. >> Yeah, not in this environment. >> No. >> You you did talk about this interesting approach uh at the German gold show late last year where you're essentially saying don't buy the ETFs because dispersion is is huge is what you call it and instead just avoid the losers, avoid the bottom few. And um is it just as simple as as ignoring the box? >> No, not quite. But but it's just to make a point that that it is a sector where active management really works. Right. So if you look at the dispersion of performance in the GDX in in 2025, uh the worst worst performing stock I think was Belleview, which actually is no longer in the index, but it was for a lot of the year. Um and that was up 50%. and and the best performer was Discovery Silver, which was up 1,080. And so I mean that's monstrous disposition, right? You don't get that in any other sector. Um and these guys both doing the both gold mines, right? Both doing the same thing. Um so it it's just to say that I you know I think that there is um you know it's a sector where if you know what you're doing it it's it it's not nearly such challenge to beat the benchmark as it is trying to beat say the S&P 500 right um because you do have this massive dispersion so the opportunities to create alpha are much greater whether you sees them or not matter. >> What causes that dispersion? You said they're both gold mines. They are. Uh why is the one doing 50 and the other one 11x? >> Um so um I think it it reflects the dispersion in uh quality of management, quality of balance sheets, quality of jurisdiction, um mind life. you know, you you've just got uh you you've got a ton of elements in the gold mining sector where you do have, you know, lots of extremes, right? >> Mhm. >> So, um it's uh you know, some some of them at some stage would be right at the bottom on all metrics and some of them at some stage be all at the top on all metrics. So it it's and then in between you've got a ton of variables of of all the other stocks doing different things. But um yeah, I think um you know and you've obviously got a big dispersion in terms of costs um uh you've got a big dispersion um in terms of management strategy about whether they're reinvesting for growth or returning cash to shareholders. and and those two kind of options go in and out of fashion. It's different kind of uh you know typically when the gold price is going up a lot people like to buy the growth and when it's not doing so well they like to buy the cash return stocks. So so so you just have many variables. >> Mhm. >> And most of those variables you know range to to to extremes in some cases. >> Do you have a checklist beyond what we and we've talked about that before. I know you put in a lot of importance on management, management track record, insider ownership and all that quality of the asset but beyond that what what is kind of the checklist uh beyond management? So um what what we try and do I mean our ideal stock right is is um a company with a long line life in a tier one jurisdiction with bottom quartile costs um and a strong cash return to shareholder policy. And you know do we always find that or when we find it does it trade in an acceptable valuation? Um you know that's that's that's another question. Um I think the other thing that we do like is lack of complexity. So um you know we like companies that have I guess two to five minds in one to two jurisdictions. Um because I think that that's a that's a much easier thing to manage and optimize than when you've got like Newmont did before their current disposal program. You know, they had 17 mines in 12 different countries, right? Just managing that you're never going to keep your costs down. You're you're never going to control each mine optimally when you've got that kind of complexity. >> Yeah. as proven by pneumon's returns up until just before last year. Like Newmont had not made money for anybody for a very long period of time. It's now um at an all-time high given the market. But yeah, that's a very good point. So something like a a Rio 2, which was also one of the better performers last year, they just added it's it's an I interviewed Alex Black about it uh recently as well, but they just added >> an underground copper mine in a different jurisdiction. Is that more too much complexity for you or would would that still be >> agree? I mean, you know, two mines in two countries next door to each other. That's fine. >> Um and um that was pretty good timing as an acquisition given what's happened to the copper price subsequently. But yeah, I mean it it's um and and Rio2's been a a very big and very successful position for us. >> Mhm. Yeah. Uh to to the point of copper, you said copper funds still small. um by design or just not a lot of interest in copper right now? >> No, I mean you know we have the energy metals fund which is much bigger which has about half of uh the AUM is invested in copper stocks. >> That makes sense. So, you know, and then the other half is in uranium, lithium, rar, all kinds of other stuff. Tin obviously um and um we just had a uh and those are you that that's a USIP fund and and our uh gold fund is obviously a usage fund that the copper fund is a Luxembourg alternative investment fund and we created it uh because a client came to us and said, "Look, we'd like a pure copper vehicle. where you so they put some money in and a few other people have put some money in. Um but you know we haven't marketed it that that heavily to be honest. >> Yeah. >> Are you are you able to uh be more contrarian in the energy fund? Like could you go and be like you know nickel's kind of starting to turn up again but it's still pretty right you know we can live or die by our results. So, um, yeah, we can, if I wanted to put 15% of the fund into nickel, if I could find enough companies to buy, then then then we would. Yeah, I'm not entirely convinced that that's the right thing to do and we haven't done it, but we do have some exposure to nickel. So, >> good. >> Outside of what we talked about so far, David, what are you what else are you paying attention to the most? either geopolitically, macroeconomically, anything else specifically within the metals space or anything even more niche within the mining space. What is uh what's catching their attention these days? >> Yeah, look, I I just think that we're finally getting to the something we've been talking about since we launched the energy metals fund. um you know, we're we're getting to the you know, the rubber's hitting the road in terms of um the way that the geopolitical environment has changed. And um I think the US in particular and no doubt the EU sort of dragging its feet behind is beginning to realize the strategic vulnerability that they've allowed themselves to fall into over the past 20 years um by letting China take control of the of the middle part of the supply chain. So smelting and refining. um and they're now belatedly throwing a ton of money at it to try to to try and undo um uh the advantage that the Chinese have created over a long period of time. Um and I think at at the same time as that the the whole problem of the complete absence of investment in new mining capacity over the past couple of decades um is finally meeting significant increase in pricing sensitive demand for metals and I think that's what's happening in copper. It's what's happening in tin. Um it's I guess it's beginning to happen in lithium. Um and yeah, I I I think that there we we're we're really at a at a turning point in terms of the perception of the mining industry. And I think we we're moving very quickly from where the mining industry was seen as an a kind of ESG embarrassment to a situation where the mining industry is being seen as a key element in the solution to a kind of geostrategic problem. and um you know the US is kind of backing that perception with um with a lot of money um and I think the EU is going to start doing that soon as well. So um yeah, I think we're we're we're at a turning point in terms of the perception of the industry and I think we're at a turning point in terms of the of the pricing cycle for most base mountains. There's a lot of misinformation, maybe probably an overused term, but there's a lot of uh bad information out there when it comes down to specifically these things. How do you protect yourself from it specifically because you do this professionally? Where do you get your information? What are you reading? Like Twitter or financial publications, Bloomberg? Yeah. Where do you get your information? >> Yeah, I read a ton of stuff, right? I mean, Twitter obviously is it's is useful for finding interesting kind of points of view or or digging deeper into individual metals markets. There's a lot of, you know, very smart people who understand the the mechanics of the underlying metals markets there. Um, yeah, I mean, we we just read a ton of stuff. um and and talk to a lot of people, go on a lot of trips, you know, try and work out what's going on. Um but, you know, I I do think that uh when you when you stand back, it's not hugely complicated what's happening, right? I think 20 years ago, China or maybe longer ago than that, China realized that it was going to need a huge amount of metal for the re-industrialization of China and the expansion of their export industry. Um, and and they didn't have the domestic geological endowment to fulfill those those needs. And um and so sure they bought a lot of mines wherever they could when whenever they were allowed to. They bought mines in Africa and in South America. Um but more importantly they realized that if they controlled the smelting industry, they would be the only market for concentrate and that their smelters would end up owning the resulting metal. >> Mhm. And then the Chinese government could decide who that metal got sold to. And I think, you know, when you look at smelting and refining, I mean, they're typical cyclical industries probably right at the bottom of the return on invested capital curve. Um, hugely cyclical, um, poor poor very poor ros over the cycle and, um, environmentally very challenging, right? I mean, you're heating stuff up to 2,000 degrees and burning off sulfur and carbon and gas and, you know, all kinds of bad stuff happening, right? And um and I think in a competitive market for for capital like the US, um you know, the the the the country was kind of happy to let this go, right? Nobody wanted to put money into it. It didn't make any money. it was an environmental liability and the Chinese said okay well we'll take that on and um I'm sure you know with state sponsored very lowcost capital um and you know they now have you know vast majority of the of the processing and refining capacity for for most base metals in China >> which means that they are the biggest buyer of the concentrate which means that they end up owning the metal at the end of the day and then they decide who they want to sell it to which is what's happened with this earth staff and tungsten staff whatever they say actually no we're not going to sell you this stuff anymore we need it ourselves or we're not going to sell it to you because we want to punish you for putting tariffs on our other stuff you know and um that's given them the drop on many global industries and and I think alarmingly for the US particularly defense um you know and and that's why the US government is reacting by throwing money at MP materials um throwing money at US anime throwing money at you know anybody who's can actually process and produce a usable metal product at the end of the day. So I think you know on top of the the kind of fundamental shortage of supply versus global demand you you've got the second constraint of of China dominating the the the middle part of the of the supply chain and actually having the power to decide who actually gets that metal at the end of the day. And that's that's a very very powerful change in the paradigm. Um, and I think those two combined are going to push metal's prices much much higher. >> There's a lot of noise around those topics too, though, right? I mean, everybody's pulling. >> That's why I say you got to stand back, right? You just got to look at the big picture. There's big demand. A lot of it's price insensitive. You know, military demand is price insensitive. Strategic demand is price insensitive. You know, if you're throwing a trillion at building data centers, what do you care about the copper cable costs? Doesn't matter. It's an infinite infinitely small part of the of the cost equation. You know, these guys there's there's a lot of applications where um they are relatively or completely pricing sensitive >> and you've got constrained supply. So, I don't say that's all you need to know because there will be many cycles within the upcycle. But standing back, I think that's the big picture, right? >> Yeah. What are you I'm looking toward wrapping it up here, David. I don't want to hold you uh all day, but any books you're reading or looking forward to reading in 2026? What are you What have you got on your shelf? >> Oh, I don't read books about finance. >> I mean, I spend a lot of the day reading research and stuff. >> That makes sense. >> I did. I I kind of read for relaxation. It's mostly kind of fiction and stuff like that. But um yeah, I I um >> you can still tell me. I'm not going to judge you. >> No, I don't think that that's uh that's not going to be illumin illuminating for your viewers, my my reading. But um yeah, I I I just think you know it it really is for for for investors a question I think of first of all um just looking at the bigger macro picture when it comes to the the base metals. Um secondly obviously you know looking at valuation and management teams to try and pick the best stocks within that. Um and I think the big mistake to avoid over the next um four or five years is going to be selling too soon. >> Yeah, that's a >> these are commodity markets, not equity markets, right? Well, our equity market is driven by commodities. And you know I was looking like in the last bull market in copper um god I'm trying to remember the numbers now but but copper for like 11 years had a 25% kagger compound annual growth rate in terms of price and um I think the the copper price went from like uh I think it went from 1,500 to 9,000 something like that. So it was kind of 800% increase and that's the second biggest metals market in the world after arrival. It was an eight bagger over I think it was 10 years um or nine years. >> So this stuff does happen, right? And just because something's doubled or or is up 200% in this kind of environment, that's that's not a good reason to sell in my view. >> Yeah, there's a great note to end the conversation on and I'm already looking forward to our next conversation. Thank you so much for doing this, David. >> Yeah, it's a pleasure. Always a pleasure. You take care.
Can Gold & Silver Stocks Still do Well in 2026? | David Finch Ixios Asset Management Interview
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Today on resource talks, is there still money to be made in gold and silver? Are the precious metals equities getting overbought? And how should I treat valuations in uh in this stage of the market? Luckily for you though, I'm not going to be the one answering any of those questions. Uh doing all the work will be David Finch of Exxius Asset Management, a Parisbased metals focused fund. David, thank you so much for sitting down with me today. >> It's a pleasure. Yeah, it's good to talk. >> Pleasure is mine. It is good to talk. And um the market itself has been pleasant since we last spoke. Really? Um GDX, GDXJ are both up close to 200% since you were last on the pod, which was um December of 2024 if I remember correctly. >> Um was that it though? I mean, have I have like if I didn't participate, which I personally did, but if people haven't participated in this uh run, >> um have they missed it? Has the easy money has it been made? Well, look, maybe maybe the easy money has been made, but um I do think that uh valuations are incredibly reasonable still in the sector. It's not like the sector's run up and everything's become really expensive. In fact, if you look at most of the gold producers, um they're on lower multiples than they were at the start of 2025 if you put spot gold into the equation. >> Mhm. So um you know when you look at the historic charts whether it's you know EV a bit or price to NAV or free cash flow yield um they're cheaper today than they were a year ago by by a little bit um and uh I think that a lot of people are suffering a bit from vertigo because they kind of feel you know gold miners went up 150% last year I feel like an idiot buying them Now, if I don't own them already, um I kind of think that's the wrong way to to look about it to look at it. Um if you go back to the last big bull market in gold between 2000 and 2011, I think the the GDX went up by nearly 900%. So, you know, I think that uh the fact that we're up 200% from the lows is perhaps, you know, it's fantastic performance, but it's not necessarily the end of it. And I think one of the dangers in commodity markets could do move in a kind of exponential fashion is is just to to take profits far too early. U so you know I I I wouldn't be surprised to see the GDX double again this year. Um you know with gold price that's that that's gently higher. Um and you look at some of the valuations on uh let's look at um EVM at DAR at 4500 gold. Um you've got stocks like uh Endeavor on 2.8 times EVIDIDA. Um you got stocks like Elderorado 3.1 times, Fortuna 2.4 times. Um and even the kind of expensive ones in inverted commas uh like acne that's on seven times EVITA DA right so you know these are these are some of the cheapest EVbit multiples that you have in the market outside oil and gas and um I just think that what what you saw last year was a kind of mechanical reaction to the higher gold price but But you haven't had any rerating at all, right? Um in fact, you've had a slight derating in terms of the multiple. And uh just you look at a stock like Oiana Gold for instance, which has got assets in New Zealand, the US and the Philippines. So you know majority of the production from tier one jurisdictions and you know that's on a that's on a PE at spot 26 PE of six times EVID of 2.7 times and a free cash flow yield of 18%. It it's difficult to argue that these stocks are overvalued right they've gone up a lot but they they really aren't expensive. So, you know, I I think there's a lot more upside and I think that um you know, you've seen the famous chart that everybody showed, including me, um showing that during this rally, you've just had serial redemptions in um in the GDX. So, you've had people who've been stuck in this sector for a long time uh taking their money out during this rally continuously. And um I think that it's difficult to argue therefore that you know this is a massive consensus trade and that everybody's already in and that everybody's crazy bullish. I I think we're a long way away from that kind of paradigm at the moment. >> Is that the right way to look at valuations in a cyclical business though? I mean generally if you look like a PE if you if you take a PE ratio uh to mining companies they will look the cheapest when they're at the top. Yeah, absolutely. And I think you know that. So what's the market saying by according these valuations? If the market's saying anything, the market's saying um gold has peaked and there's going to be a severe reversion to the mean or they're saying that these companies are going to squander all the cash that they're making. Um they're going to do overpriced M&A. They're going to build crazy expensive mines and they're going to end up destroying all this value. >> Mhm. >> Um, and I kind of think both of those are wrong. I mean, I would say that cuz I run a gold mining fund, but uh I don't see any of the things that have driven gold higher changing in 2026. And I think that so far in this cycle um the producers have been incredibly responsible in terms of their capital management and you know every discussion I have with with management groups and producers they're you know the first thing is um to talk about cash return to shareholders and not whether they're going to do it but how how best to do it right so I think that we are um we're kind of in a in a in a in a different paradigm. I think we're still very early in the cycle and I think these stocks will get rerated over time. And to your point about cyclicality, yeah, sure, you know, steel makers tend to be on two times EVID right at the top of the cycle before steel collapses. Um do do we really think the gold price is going to collapse from here? I I kind of don't actually. So I see this as an opportunity rather than a a top of cycle kind of uh phenomenon. >> What do you think? >> What could bring us then into into the next leg up from here on out because um what brought us here is likely not going to be the same thing that brings us into into the next leg up uh or pushes us down. So yeah, what do you think is needed for a bigger move from here on out in um in the equities? So when I talk to the investors in our fund um they which is essentially private money right so it it it's family officers private wealth managers we have some institutions in the capital but not a lot um and I think that that those guys divide into two camps um and I think institutions do as well but but particularly private money um the guys have always had gold right so they've always had five to 10% of their assets in gold. Um when they get bullish, they add some gold miners to get the leverage effect. Um and you know, they they they regard that as a cornerstone of their portfolio allocation. And then you've got the other guys who are the kind of Warren Buffett guys who have never owned gold, never really thought about it. Um they don't see any reason to own, you know, a piece of metal which has got no yield and which you can't value rationally. Um and they've got zero. And I think the next leg up comes from pressure on those guys to get some kind of exposure. >> And um you know we we've seen that in our in our marketing. You know we're getting calls from guys who we've seen once a year for the past four years. They said, "Oh yeah, that's all very interesting, but we don't really like gold. We don't really see any reason to own it, so we're not going to own gold miners." And now they're coming back and you know they're getting questions from their clients about why they haven't got any gold because the guys who have got gold have been doing a lot better or gold miners. And um and I think those guys often they they will look at gold miners because there's a yield there's a valuation which they can't get with physical gold. Um and and we're certainly seeing a kind of growth in interest from those kind of people. And I think if you look at the much bigger institutional world, it's exactly the same. The vast majority of US pension funds don't have any exposure to gold. >> Mhm. >> And they certainly don't have any exposure to gold miners. >> And that's such a huge pool of capital that it it it doesn't take a you know a large majority of them to decide to make an allocation. And if 20% of them decide to put some money into gold miners, that's going to be enough to double the gold mining scent. >> You mean in terms of valuations like the you'd expect the GDX to double if that would happen? >> Yeah. >> I think it probably will in 2026. It'll double from where we were at the beginning. >> And you you don't think the gold price needs to double for that to happen? Like you don't think we need to be >> Absolutely not. No, no, no, no, no. >> I mean the gold for that to happen. that can't happen if the gold price starts to correct significantly. Uh I think that you know you've got to have a some kind of upward momentum in the gold price to to to get people to feel that they're missing out and that they need to be in the sector. But I don't think the gold price needs to double. I mean you know the leverage effect is um extraordinary in gold miners. So last year, gold went up 62% I think and our fund went up 185%. So that's kind of a three times leverage, right? >> Mhm. >> So I think you know for the sector for the sector to double mechanically without any rerating, gold has to go up another 25%. >> Which will put us at like well just under 6,000. Um, but I think that, you know, even if gold just trends upwards and it goes up gently, it goes up 15% in 2026, I think that'll be enough for the sector to double because I think that the valuations will rerate. The earnings will go up, but they'll get a higher multiple. >> I like that view because there's I don't want to turn this into a a macro podcast. I think there's plenty of those out there. Uh, but there's there's a lot of people who are going to overpromise and and underdel. They're going to claim, you know, 10 $20,000 gold and whatever, and it's going to get you the clicks. But I appreciate kind of your your uh more uh down to earth view. So, yeah, what could I reasonably expect from here on out in terms of returns over call it 3 to 5 years if the setup is what you you believe it will be? And then I suppose more importantly, what is it going to be driven by? like what are the assumptions that you're making for you know 25% this year and then on to >> I'm not making that assumption that's what I'm saying needs to happen for uh the GDX to double I think it you know I think it will happen but I think you know trying to have a a target price for gold is a fool's errand right because it it's not a commodity where you can build a supply demand model and calculate deficits or whatever right it's It's not a commodity at all, but that's another argument. But, you know, the potential supply of gold is all the gold that's ever been mined, right? Because it's all sitting in a vault somewhere or around somebody's neck or, you know, it it it's all there. And so, the potential supply is massive. And you can't model or understand at what price some guy who's got a bar of gold in a vault in Geneva is going to sell it at. Is he a seller at 6,000, at 10,000 at who knows, right? And and what will drive his decision will depend on all kinds of different factors for different people. Um and um it's the same for the demand side. Nobody actually needs to own this, right? um nobody needs it to make products or to survive or whatever. So, so it's a it's a financial or almost a philosophical decision about whether you want to own gold or not. So, you know, I think both the supply and the demand side are impossible to model in gold >> and I think anybody who pretends that they can do that, you know, killing themselves. So um I think that all you can do is look at what is driving a that's the that you know mine supply increases the world stock of gold I don't know by one and a half% a year or something. So you even if miners miraculously increase production by 30%, it doesn't really make any difference to the to the total potential supply of gold. >> And and you've just got to think, you know, are people going to continue to want to protect themselves against devaluation of fiat money, massive overindness of states, you know, all all geopolitical tension, all the all the stuff that's driven it in in 2025. Is that going to carry on in 2026? I I think so. Is it perhaps going to accelerate? Probably. Um and that's the kind of best I can do in terms of in terms of analysis of where the gold price is going. >> Yeah. >> And um you know, as for supply, are central banks going to turn around and start selling? I kind of doubt it. um you know if we have a big financial crisis typically gold has been a source of dollar liquidity and so it gets sold off uh as we saw in 2008 right um but uh I kind of think that governments are doing everything they can to avoid having a financial crisis doesn't mean they'll succeed but um you know I think it looks as if uh rates are going to get cut again next year deficits going to explode again. Uh, and I think, yeah, gold should be on an upper par >> and I think that'll be enough to rerate the sector fairly significant once people get comfortable with that trend. >> But wait, what is the philosophical take though? That's the economist take. I need the philosophical take. No, I mean it's just philosophical about not really philosophical but you know some people um believe that gold is the kind of asset ultimate asset of of refuge and some people believe that the ultimate asset of refuge is US treasuries right >> and that's that you know hence the 6040 portfolio whatever it is that most American institutions base their asset allocation off there's no place for gold in that right so >> yeah Um it and I guess that you know some of the potential buying of gold will come from people re-examining that. >> I think very few people um uh that actually might not be true but very few people around me still believe the 6040 portfolio even you know the non-investment. >> Yeah. you're surrounded by, you know, all kinds of clever people who've been looking at gold for a long time, right? Whereas, um, >> you know, if if you stand up in in a US pension fund committee meeting and suggest putting 10% of the portfolio into physical gold, you'd be pretty much an outlier. >> Yeah. The indices are seeing big inflows though as well. I mean, on a on a six-month basis, GDX um, well, not big, but inflows. So GDX has got 1.34% inflow on a six-month basis. GDXJ less than that, half a half a percent. But the silver ETFs though, so the SE and the SIGJ, they're both close to 25% more AUM um than what they were 6 months ago. So it's SL, Silj, GDX, and then GDXG in terms of the size of influence. But again, all influence. >> Yeah. I mean, the silver, you know, the silver stuff is is pretty small, right? I mean the market cap of the companies involved is pretty small and >> most of them produce more gold than silver, right? So um but yeah, you know, I think that and I bet that that's essentially retail money, right? Coming into those ETFs. It's not institutional money. >> Yeah. What is it what what is it telling you though? Is it more noise than anything else? Is there any direction that you can read out of those inflows? >> Well, they're tiny, right? And if you look at 2025 as a whole for the GDX and it was outflows, right? >> Mhm. >> Um fairly significant outflows. Um I'll send you the chart after the meeting from from from Bloomberg. But um and I think that that's just people who've been stuck in it since 2011 just getting out right finally get back to their original price. And um you know the old thing well when you buy something that goes down the psychological trap of saying well I'll sell it when it goes back up to my purchase price right and 10 years later it's got there and people say thank god for that you know I can get out of this thing. >> Yeah. How's uh how's how are inflows for you for Ixius? How are you doing? >> Look um we had some good inflows in 2025. The majority of them came in the first quarter of the year. Um, and I I would say in the in in the back half of the year, it's been relatively flat. We've seen we've seen some people taking profits um and we've seen kind of offsetting inflows into the gold funds. So, it's really been um uh I would say in the second half of the year, probably net inflows were were small positive small positive >> the energy metals fund which is our other fund you know uh that seemed that didn't see any interest in the first half of the year and big inflows in the second half of the year >> that's something that I did want to touch upon maybe toward the latter part of the conversation um that money who's it because you mentioned it's it's family funds and so on is it only professional investors that the money is coming from or are you getting any retail money in as or where's the majority of those inflows coming from? >> We've got we we've got a little bit of retail money that comes in through um you know these European life insurance kind of products um equity link life insurance products um it's very small and we and we don't really market to that client base >> um so the the vast majority of our money is I'd say probably 70% wealth management and 30% institutional >> kind of like insurance company bank kind of institutional >> and and the gold fund is is still the biggest one in terms of absolute amounts. >> Yeah, the gold fund is about 620 million I think US and the energy metals fund is about 250 million US. Oh >> okay. You do have you have you've got a copper fund as well that you just recently started last It's not a use its fund. Uh it's a it's a Luxembourg alternative investment fund and it's only got about 20 I think it's got 27 million or 28 million US in it. It's pretty small. >> Okay. Yeah. Chump change obviously. Um I knew that. Uh no, but um I remember the title last time when I spoke to you was that it's a $449 million fund. So you're about double um since since then, which is uh well not too bad uh in terms of aum. So, so good on you. What is uh what's the breakdown in the gold fund in terms of metals within it? So, gold versus silver. Again, you said silver not that easy to get exposure to. So, would it be like an 80/20 split or what's the split there? >> There's various ways of cutting that. So, uh and obviously as time's gone by most of the silver miners have acquired gold assets, right? Which is the case for Pan-American. That's the case for curve who recently or in the process of buying new gold. Um I think the only one that's actually increased its share of silver is first majestic when they bought uh bought gas. >> Um so it depends you know people refer to those as silver miners. It depends whether you count that as 100% silver which it's kind of not right. So uh and the same for the explorers often you know they they declare their asset and silver equivalent but there's a lot of lead and zinc and gold and copper and other stuff in there. Um so I think if you look at the real um exposure in terms of percentage of production in silver for the producers and percentage of the resource in in silver for explorers and developers it's probably about 10% of the fund >> right and that's just because of how the how how the the sector really is because silver is a byproduct in in general most silver companies are not silver companies like I I I dare say that most silver companies are actually probably more gold companies if uh >> most of them yeah I mean it's good if they're getting above 50% silver right >> which I mean that doesn't happen too oft just because of how silver is in the ground and then probably if that happens they're based in Mexico um one of the few places that you can find deposits that are more silver than gold still not easy to find in terms of size though >> is there um is there has any What what if if anything what has changed in your strategy? Are you taking more risk and and going more toward the juniors within the fund or are you still kind of you know keeping it developers and and producers? >> No, I mean it's that you know the fund is about I guess about 60% producers and about 40% exploration and development and probably split half and half between the two. So, >> okay. >> I mean, there's companies, you know, like I like like Skina, for instance, which I count as a developer because they've already started to build the mine even though they haven't got their permits, right? Um, and then there's the, you know, the smaller stuff, uh, well, not smaller, but earlier stage stuff like, um, like Collective, for instance, which is, you know, they're still trying to define what they've got. So, I count that as an explorer. Um so but yeah so so we I mean we have a significant exposure to the non-producing sector. Um and actually you you kind of would have thought in this bull market that that would have been the big driver of outperformance but it hasn't been actually and maybe because it's I'm not a very good stock picker in that part of the part of the thing but um you know it it's it's been you know the best performing stock in our portfolio last year was Discovery Silver which is which became a producer, right? Um and uh yeah, you know, and we probably got one or two explorers were actually ended up down. So, um you know, it it's difficult to characterize it as, you know, a mass kind of rerating of gold in the ground versus guys producing gold. I don't think that analysis really stands out. >> Mhm. Certainly not in our experience anymore. >> Yeah. >> Last time we spoke your your biggest position in that fund was Alamos if I remember correctly. What is it now? What's the biggest position now? >> It's Discovery Silver. >> Just because it's grown out and uh so you have you've not you've not have you derisked it or or gotten out a little bit. >> Yeah, we've taken some profits on the way up unfortunately. Um I mean I wish we had but um you know I think last year it was up 1,080%. So it was an 11 nearly an 11 bagger. >> Yeah. >> Um so obviously it changed statute from being a kind of pyramid challenged lowgrade silver open pit in Mexico to being a a significant producer in Canada. So um you know it wasn't uh it wasn't kind of organic that that that appreciation but yeah >> so that's a position. >> How do you know when to sell? Like what valuation assumptions do you use? Like uh is it gold price? Uh what are you looking at when it's time to uh exit or take some profits? Yeah, look, um I think the there isn't a magic formula. uh I don't think um you know uh because uh so if you look at discovery silver now it's got a relatively low free cash flow yield uh not expensive on eBar I think it's on about six times 20 26 if you use spot so hasn't become expensive yet um you know it doesn't have a high free cash flow yield because they are you know investing um in exploration and and expanding production which is kind of fine. Um and I think you know if you look at it on a on a price to uh net asset value basis um it's still I think quite cheap. So, uh, yeah, I I I kind of had difficulty selling it just cuz it's gone up a lot, right? >> Um, but we'll see >> when you're building an NPV model uh for yourself. What are the valuation assumptions you use there? Like, and do you use spot? Is that reasonable to expect? And then also discount rate. I mean, we see a lot of these uh studies have being done at 5% which is obviously not reasonable. Um, or or capex contingencies. We've seen capex blowouts a lot across the board. So what are those inputs that you use when you value miners in in this current environment? >> Um I always use spot. >> Um because that's the only gold price I'm certain of. Um I don't think there's much point using past gold prices. Um and future gold prices, who knows? So um and I think the important thing is I I use price to net asset value as a compar as a relative valuation tool not as an absolute valuation tool. >> Um so I use it to com it allows you to compare companies which have very different mind lines. Right? That's the that's the purpose of it. So I think provided you use the same discount rate and the same gold price in all your models then it kind of works for me right. >> Yeah that enables me to say you know whatever metrics I've chosen that one stock is trading at a significant discount to another. And then I think you know we were talking about this earlier um how do you adjust for jurisdictional risk um again I think that's a very inexact science right um and because you're you're you're trying to gain something um in terms of jurisdiction where jurisdictional risk is difficult to quantify and it's binary so either happens or it It's so um yeah I I I I kind of uh I I don't put a jurisdictional risk into the into the MPV model. I just do the straight MPV calculation and then kind of it's more an art than a science about working out whether it's cheap enough to compensate you for the risk or not. Right. And typically we've we've avoided that kind of we've kind of avoided extreme risk, right? Which is which has done quite nicely for us. So, you know, we uh we've not had any exposure to to to to Mali uh during this kind of meltdown and internal politics in Mali. Um, and you know, we we we we do have a small a very small exposure to the DRC, but you know, that's um a much bigger one in the Energy Metals fund because we're big holders of Alphamin, but um I I tend to try and avoid that risk unless things really become very egregiously cheap. And I think that the jurisdictional profile of something that's perceived as risky is starting to improve a bit. And uh you know jurisdictional risk changes a lot, right? It it's not a it's not a stable thing. Jurisdictions get a lot worse and a lot better um uh in in cycles. So um you know it it's something that we think about a lot. We don't like to take a lot of jurisdictional risks. That's not really what we're paid to do, I don't think, is to take a view on the geopolitics of a small African country. Um, so we tend to avoid that risk, but occasionally, you know, we we will take that kind of risk if we think it's offset by the quality of the project and the people involved in. >> Is there ever a jurisdiction premium though? And it almost sounds like a rhetoric question here giving you a previous answer, but would you ever look at something like let's say Code Devoir, which I'm very biased on it, fair disclaimer, honest confession, I have a decent chunk of chunk of my own money invested there and I just recently went there for a site visit as well. But so just looking at it from a hypothetical perspective where it's something like something like Ivory Coast is becoming, you know, kind of the flavor. >> We have some exposure to Ivory Coast, right? >> Yeah. But would you pay a higher premium? Would you ever be like, "Okay, I'm comparing these things on an EV to MPV or whatever it might be." EVITA, but Ivory Coast, I'm willing to pay, you know, 10 or 20% more. Is that something you would think about? >> Well, 10 10 or 20% more than uh >> Yeah. >> Not 10% more than Canada, right? >> Um I mean, don't forget, I mean, there was a there was a revolution in the Ivory Coast 15 years ago. People were shooting each other in the streets, right? >> Yeah. Um so which goes to my point is that juris jurisdictional perception is cyclical and um you know would we have 20% of the fund exposed to Ivory Coast? Well no to be honest. I mean we own some exploration companies there um but um it's probably three 3% of the portfolio something like that and I'm I'm kind of cool with that. What is the highest waiting in terms of uh jurisdictions in the portfolio? >> Oh, it's Canada >> by a lot. >> Yeah. >> And Australia second. >> Okay. So, you do what would the split be between TSX and ASX? >> Um, in terms of quotation, it's kind of 60 Canada, 30 uh Australia, and 10% bits of US and UK. >> Okay. Yeah, that's interesting. Uh would is that by design or did it just kind of happen that the assets that you liked were listed on the one versus the other? >> Yeah, it's kind of um I mean in the back of my mind there's a kind of um I don't want to get too out of whack with the country waitings in our benchmark. Um I think a actually in the new underlying index of the GDX Australia has been reduced I think quite a bit um because some of the Australian midcaps were kicked out of the index but Australia is probably about 20 in our benchmark. Um, so we're a bit overweight, but that's not because we own lots of Australian listed producers. It's because we got quite a lot of Australian listed exploration and development companies. But, um, yeah, I mean, I don't want to stray massively. I mean, I wouldn't have I wouldn't have it the other way round like 60% Australia and 30% Canada. And it it's not such a deep market as Canada in terms of either liquidity or the number of potential stocks you can buy. >> I think there's also limits um in terms of uh rules and regulation in terms of how much cash you can keep if I'm if I'm not mistaken or can you just choose that yourself? Could you go 50% cash tomorrow? No, I think I think I think we're we're not allowed to have more than 20% from from memory. >> Okay. So, how much >> we never had anything like that to be honest. >> Okay. >> Right. I I kind of look people give us money. All our vast majority of our investors are professional investors. They give us money to invest in gold miners because they're bullish on gold. It's not my job to say to them, you're wrong. I'm putting 20% of the funding care. >> I don't see that as my job. Right? But my job is just to buy the best gold mining companies that I can with their money. And if they get bearish on gold, well, they can take their money out of the fund. And um so I I'm not going to second guessess the people who are giving me money by holding it in cash. >> Mhm. >> Yeah. >> So, you know, we I think you occasionally when we get an inflow that we haven't yet deployed or whatever, maybe maybe we have 3% cash or something in a fund, but I don't like to go a lot more than that. >> Yeah. Would you still do it the same way if it was just um you running your own money? Would you keep more cash than that? >> Uh, no, I don't think so. >> Yeah, not in this environment. >> No. >> You you did talk about this interesting approach uh at the German gold show late last year where you're essentially saying don't buy the ETFs because dispersion is is huge is what you call it and instead just avoid the losers, avoid the bottom few. And um is it just as simple as as ignoring the box? >> No, not quite. But but it's just to make a point that that it is a sector where active management really works. Right. So if you look at the dispersion of performance in the GDX in in 2025, uh the worst worst performing stock I think was Belleview, which actually is no longer in the index, but it was for a lot of the year. Um and that was up 50%. and and the best performer was Discovery Silver, which was up 1,080. And so I mean that's monstrous disposition, right? You don't get that in any other sector. Um and these guys both doing the both gold mines, right? Both doing the same thing. Um so it it's just to say that I you know I think that there is um you know it's a sector where if you know what you're doing it it's it it's not nearly such challenge to beat the benchmark as it is trying to beat say the S&P 500 right um because you do have this massive dispersion so the opportunities to create alpha are much greater whether you sees them or not matter. >> What causes that dispersion? You said they're both gold mines. They are. Uh why is the one doing 50 and the other one 11x? >> Um so um I think it it reflects the dispersion in uh quality of management, quality of balance sheets, quality of jurisdiction, um mind life. you know, you you've just got uh you you've got a ton of elements in the gold mining sector where you do have, you know, lots of extremes, right? >> Mhm. >> So, um it's uh you know, some some of them at some stage would be right at the bottom on all metrics and some of them at some stage be all at the top on all metrics. So it it's and then in between you've got a ton of variables of of all the other stocks doing different things. But um yeah, I think um you know and you've obviously got a big dispersion in terms of costs um uh you've got a big dispersion um in terms of management strategy about whether they're reinvesting for growth or returning cash to shareholders. and and those two kind of options go in and out of fashion. It's different kind of uh you know typically when the gold price is going up a lot people like to buy the growth and when it's not doing so well they like to buy the cash return stocks. So so so you just have many variables. >> Mhm. >> And most of those variables you know range to to to extremes in some cases. >> Do you have a checklist beyond what we and we've talked about that before. I know you put in a lot of importance on management, management track record, insider ownership and all that quality of the asset but beyond that what what is kind of the checklist uh beyond management? So um what what we try and do I mean our ideal stock right is is um a company with a long line life in a tier one jurisdiction with bottom quartile costs um and a strong cash return to shareholder policy. And you know do we always find that or when we find it does it trade in an acceptable valuation? Um you know that's that's that's another question. Um I think the other thing that we do like is lack of complexity. So um you know we like companies that have I guess two to five minds in one to two jurisdictions. Um because I think that that's a that's a much easier thing to manage and optimize than when you've got like Newmont did before their current disposal program. You know, they had 17 mines in 12 different countries, right? Just managing that you're never going to keep your costs down. You're you're never going to control each mine optimally when you've got that kind of complexity. >> Yeah. as proven by pneumon's returns up until just before last year. Like Newmont had not made money for anybody for a very long period of time. It's now um at an all-time high given the market. But yeah, that's a very good point. So something like a a Rio 2, which was also one of the better performers last year, they just added it's it's an I interviewed Alex Black about it uh recently as well, but they just added >> an underground copper mine in a different jurisdiction. Is that more too much complexity for you or would would that still be >> agree? I mean, you know, two mines in two countries next door to each other. That's fine. >> Um and um that was pretty good timing as an acquisition given what's happened to the copper price subsequently. But yeah, I mean it it's um and and Rio2's been a a very big and very successful position for us. >> Mhm. Yeah. Uh to to the point of copper, you said copper funds still small. um by design or just not a lot of interest in copper right now? >> No, I mean you know we have the energy metals fund which is much bigger which has about half of uh the AUM is invested in copper stocks. >> That makes sense. So, you know, and then the other half is in uranium, lithium, rar, all kinds of other stuff. Tin obviously um and um we just had a uh and those are you that that's a USIP fund and and our uh gold fund is obviously a usage fund that the copper fund is a Luxembourg alternative investment fund and we created it uh because a client came to us and said, "Look, we'd like a pure copper vehicle. where you so they put some money in and a few other people have put some money in. Um but you know we haven't marketed it that that heavily to be honest. >> Yeah. >> Are you are you able to uh be more contrarian in the energy fund? Like could you go and be like you know nickel's kind of starting to turn up again but it's still pretty right you know we can live or die by our results. So, um, yeah, we can, if I wanted to put 15% of the fund into nickel, if I could find enough companies to buy, then then then we would. Yeah, I'm not entirely convinced that that's the right thing to do and we haven't done it, but we do have some exposure to nickel. So, >> good. >> Outside of what we talked about so far, David, what are you what else are you paying attention to the most? either geopolitically, macroeconomically, anything else specifically within the metals space or anything even more niche within the mining space. What is uh what's catching their attention these days? >> Yeah, look, I I just think that we're finally getting to the something we've been talking about since we launched the energy metals fund. um you know, we're we're getting to the you know, the rubber's hitting the road in terms of um the way that the geopolitical environment has changed. And um I think the US in particular and no doubt the EU sort of dragging its feet behind is beginning to realize the strategic vulnerability that they've allowed themselves to fall into over the past 20 years um by letting China take control of the of the middle part of the supply chain. So smelting and refining. um and they're now belatedly throwing a ton of money at it to try to to try and undo um uh the advantage that the Chinese have created over a long period of time. Um and I think at at the same time as that the the whole problem of the complete absence of investment in new mining capacity over the past couple of decades um is finally meeting significant increase in pricing sensitive demand for metals and I think that's what's happening in copper. It's what's happening in tin. Um it's I guess it's beginning to happen in lithium. Um and yeah, I I I think that there we we're we're really at a at a turning point in terms of the perception of the mining industry. And I think we we're moving very quickly from where the mining industry was seen as an a kind of ESG embarrassment to a situation where the mining industry is being seen as a key element in the solution to a kind of geostrategic problem. and um you know the US is kind of backing that perception with um with a lot of money um and I think the EU is going to start doing that soon as well. So um yeah, I think we're we're we're at a turning point in terms of the perception of the industry and I think we're at a turning point in terms of the of the pricing cycle for most base mountains. There's a lot of misinformation, maybe probably an overused term, but there's a lot of uh bad information out there when it comes down to specifically these things. How do you protect yourself from it specifically because you do this professionally? Where do you get your information? What are you reading? Like Twitter or financial publications, Bloomberg? Yeah. Where do you get your information? >> Yeah, I read a ton of stuff, right? I mean, Twitter obviously is it's is useful for finding interesting kind of points of view or or digging deeper into individual metals markets. There's a lot of, you know, very smart people who understand the the mechanics of the underlying metals markets there. Um, yeah, I mean, we we just read a ton of stuff. um and and talk to a lot of people, go on a lot of trips, you know, try and work out what's going on. Um but, you know, I I do think that uh when you when you stand back, it's not hugely complicated what's happening, right? I think 20 years ago, China or maybe longer ago than that, China realized that it was going to need a huge amount of metal for the re-industrialization of China and the expansion of their export industry. Um, and and they didn't have the domestic geological endowment to fulfill those those needs. And um and so sure they bought a lot of mines wherever they could when whenever they were allowed to. They bought mines in Africa and in South America. Um but more importantly they realized that if they controlled the smelting industry, they would be the only market for concentrate and that their smelters would end up owning the resulting metal. >> Mhm. And then the Chinese government could decide who that metal got sold to. And I think, you know, when you look at smelting and refining, I mean, they're typical cyclical industries probably right at the bottom of the return on invested capital curve. Um, hugely cyclical, um, poor poor very poor ros over the cycle and, um, environmentally very challenging, right? I mean, you're heating stuff up to 2,000 degrees and burning off sulfur and carbon and gas and, you know, all kinds of bad stuff happening, right? And um and I think in a competitive market for for capital like the US, um you know, the the the the country was kind of happy to let this go, right? Nobody wanted to put money into it. It didn't make any money. it was an environmental liability and the Chinese said okay well we'll take that on and um I'm sure you know with state sponsored very lowcost capital um and you know they now have you know vast majority of the of the processing and refining capacity for for most base metals in China >> which means that they are the biggest buyer of the concentrate which means that they end up owning the metal at the end of the day and then they decide who they want to sell it to which is what's happened with this earth staff and tungsten staff whatever they say actually no we're not going to sell you this stuff anymore we need it ourselves or we're not going to sell it to you because we want to punish you for putting tariffs on our other stuff you know and um that's given them the drop on many global industries and and I think alarmingly for the US particularly defense um you know and and that's why the US government is reacting by throwing money at MP materials um throwing money at US anime throwing money at you know anybody who's can actually process and produce a usable metal product at the end of the day. So I think you know on top of the the kind of fundamental shortage of supply versus global demand you you've got the second constraint of of China dominating the the the middle part of the of the supply chain and actually having the power to decide who actually gets that metal at the end of the day. And that's that's a very very powerful change in the paradigm. Um, and I think those two combined are going to push metal's prices much much higher. >> There's a lot of noise around those topics too, though, right? I mean, everybody's pulling. >> That's why I say you got to stand back, right? You just got to look at the big picture. There's big demand. A lot of it's price insensitive. You know, military demand is price insensitive. Strategic demand is price insensitive. You know, if you're throwing a trillion at building data centers, what do you care about the copper cable costs? Doesn't matter. It's an infinite infinitely small part of the of the cost equation. You know, these guys there's there's a lot of applications where um they are relatively or completely pricing sensitive >> and you've got constrained supply. So, I don't say that's all you need to know because there will be many cycles within the upcycle. But standing back, I think that's the big picture, right? >> Yeah. What are you I'm looking toward wrapping it up here, David. I don't want to hold you uh all day, but any books you're reading or looking forward to reading in 2026? What are you What have you got on your shelf? >> Oh, I don't read books about finance. >> I mean, I spend a lot of the day reading research and stuff. >> That makes sense. >> I did. I I kind of read for relaxation. It's mostly kind of fiction and stuff like that. But um yeah, I I um >> you can still tell me. I'm not going to judge you. >> No, I don't think that that's uh that's not going to be illumin illuminating for your viewers, my my reading. But um yeah, I I I just think you know it it really is for for for investors a question I think of first of all um just looking at the bigger macro picture when it comes to the the base metals. Um secondly obviously you know looking at valuation and management teams to try and pick the best stocks within that. Um and I think the big mistake to avoid over the next um four or five years is going to be selling too soon. >> Yeah, that's a >> these are commodity markets, not equity markets, right? Well, our equity market is driven by commodities. And you know I was looking like in the last bull market in copper um god I'm trying to remember the numbers now but but copper for like 11 years had a 25% kagger compound annual growth rate in terms of price and um I think the the copper price went from like uh I think it went from 1,500 to 9,000 something like that. So it was kind of 800% increase and that's the second biggest metals market in the world after arrival. It was an eight bagger over I think it was 10 years um or nine years. >> So this stuff does happen, right? And just because something's doubled or or is up 200% in this kind of environment, that's that's not a good reason to sell in my view. >> Yeah, there's a great note to end the conversation on and I'm already looking forward to our next conversation. Thank you so much for doing this, David. >> Yeah, it's a pleasure. Always a pleasure. You take care.