Turning and turning in the widening gyre
The falcon cannot hear the falconer;
Things fall apart; the centre cannot hold;
Mere anarchy is loosed upon the world,
The blood-dimmed tide is loosed, and everywhere
The ceremony of innocence is drowned;
The best lack all conviction, while the worst
Are full of passionate intensity.
William Butler Yeats, “The Second Coming”
Despite widespread claims of speculative excess, gold prices are supported by a durable macro regime characterised by geopolitical fragmentation, fiscal constraint, and elevated tail risk. In such an environment, historically high gold prices are not aberrational, they are structural, and they enable select gold miners to generate sustained economic profits while still trading at very attractive valuations. In a year in which the SPDR Gold Shares (GLD) has risen by nearly 64%—the biggest single-year gain since 1979—and the iShares MSCI Global Gold Miners ETF (RING) has shot up by more than 156%, it is easy to conclude that gold, and by extension, gold miners, are unlikely to be market beaters in the year ahead. The Bank of International Settlements (BIS)—”the bank for central banks”—said in its final report for the year, that gold and stocks, which exhibited “explosive behaviour” in 2025, are both in a bubble. It was this very framing and Dongshuai Zhao’s forecast of gold’s correction a month ago that caused me to sell Greatland Resources Limited (ASX:GGP), K92 Mining Inc. (TSX:KNT) and DRDGOLD Limited (JSE:DRD); and Apex Mining Co., Inc. (PSE:APX). However, in the period since, I have evaluated the sustainability of this “bubble”. In his book, The Alchemy of Finance, George Soros speaks about fertile errors, and the exploiting of bubbles to earn excess returns. Moreover, the BIS noted that, “during the development phase of the bubble, investors jumping on the trend could still benefit from further price increases”. Those who, for instance, have decried the valuations of Tesla, Inc. (TSLA), or NVIDIA Corporation (NVDA), for example, have to endure years of fantastic returns by these stocks. I, for instance, am of the view that the S&P 500 is likely to deliver returns in the low single-digits in the decade ahead, as a consequence of the U.S. equity preference—the share of the aggregate portfolio allocated to equities—, but, if one traded purely on equity preference, over time, the S&P 500 would come out the winner. It is not enough for an asset to be in a bubble, there must be a powerful catalyst for its bursting. Rather than near-term catalysts for a crash—gold remains expensive because uncertainty is expensive—, one sees support for elevated prices, and in this environment, Apex Mining and Greatland Resources are very attractive bets.
An Age of Uncertainty
We are living in a geoeconomic moment, a time in which the tools of economics—such as tariffs, regulations, asset seizures, and export controls—are deployed in pursuit of security goals. This is an age of a great backlash against the neoliberalism of Reagan and Thatcher and Keynesian internationalism. It is an age of polarization, in which the populist right is in ascendancy, and only the populist left is a viable challenger, an age of contested policies, in which, “the centre cannot hold”. In our age, free trade is giving way to mercantilism; and the pax Americana is giving way to competitive bipolarity—wherein China’s manufacturing hegemony is at odds with America’s financial hegemony, and the two superpowers compete for tech hegemony. Despite a discourse of deglobalization, this is an age in which integration is deepening, leading to more fragile systems. Ours is an age of uncertainty, an age deeply favourable to gold, with the World Gold Council finding that “risk & uncertainty” was the single largest contributor to gold’s 2025 performance.
The increasing frequency of tail-risk events can be seen in rising S&P 500 kurtosis and persistently elevated Cboe SKEW Index. In such an environment, gold’s role as portfolio insurance and a diversifier against fat-tail outcomes becomes structurally valuable, supporting a higher equilibrium price even outside acute crises.
Source: World Gold Council
In the paper, “Mining Gold for Regimes”, Suvak et al show that gold exhibits three distinct regimes—acting at times as a real asset, a commodity, or as a stable currency—and that this structural flexibility is why it deserves a place in strategic allocations, especially in environments where traditional carry and valuations are shifting. Gold’s capacity to behave differently across regimes (e.g., inflationary, deflationary, or uncertainty-driven) underpins its long-term case. In periods of heightened geopolitical risk, fiscal excess, and inflation pressures, gold displays the characteristics of a stable currency and serves as a meaningful diversifier rather than a speculative commodity. Vineer Bhansali, the chief investment officer (CIO) at LongTail Alpha, argues that gold’s long-term valuation is shaped more by entrenched structural uncertainty and evolving macro regimes than by short-run cyclical factors alone.
Consensus Expectations Imply Historically Elevated Gold Prices
The World Gold Council’s Gold Valuation Framework shows that even under consensus macro assumptions—global growth at roughly the high-2% range; the Fed delivers around 75 bps of additional easing as core inflation slows by about 40 to 60 bps by year-end, and the U.S. dollar firms modestly while yields stay broadly flat—, gold remains rangebound at historically high levels, within ±5% of the November 2025 LBMA PM benchmark. Elevated prices are no longer dependent on crisis conditions, rather, they are consistent with a “steady-state” macro environment shaped by uncertainty rather than overheating or collapse.
Source: World Gold Council
While real rates and the dollar are still cyclically high, the balance of risks points toward policy easing rather than tightening in most plausible scenarios. Federal Reserve Chair Jerome Powell has overseen a cautious rate cutting regime that, if President Donald Trump’s call for more aggressive interest rate cuts is met by action on the part of the next Chair, will, at the very least, be maintained. In both the “shallow slip” and “doom loop” scenarios, lower rates and a softer dollar materially boost gold. Even in the consensus scenario, the absence of meaningfully higher real yields limits downside. Only a successful reflationary boom with higher rates and a much stronger dollar generates a sustained bearish outcome—and even then, prices remain historically high.
In a recent note Dr. Juergen Michels of BayernLB, estimated that the yield curve will steepen from June 2026 while two-year Treasury yields continue their decline, and U.S. fiscal deficits and resulting high Treasury issuance lead 10-year Treasury yields higher. In his estimation, 10-year Treasury yields will rise to 4.4% by the end of 2026, as short-term rates fall. A steepening yield curve driven by falling short-term rates and deficit-induced upward pressure on long-term yields is neutral to bullish for gold, unless it produces a sustained rise in real yields. More likely, it reinforces the macro backdrop of policy constraint, fiscal stress, and elevated tail risk—conditions under which gold tends to remain structurally supported rather than undermined.
A Goldilocks Scenario Supports High Gold Prices
Nouriel Roubini—so correct in his analysis of the U.S. economy this year—believes that there are three scenarios for the U.S. economy in 2026: (i) a baseline “Goldilocks” scenario in which the “US will suffer a growth recession (meaning below-trend GDP growth) for a few months, followed by a recovery and a gradual decline in the inflation rate toward the US Federal Reserve’s 2% target” (ii) a second scenario in which the “economy experiences a shallow recession for a few quarters, followed by a slower return to growth than in the first scenario”, and (iii) a “no-landing” scenario in “which growth remains strong but inflation does not fall toward the target rate”. Roubini’s baseline rests on a moderation of tariff shocks; and a mid-2026 recovery supported by monetary easing, fiscal stimulus, “strong household and corporate balance sheets; easy financial conditions”, and “and the strong tailwinds from capital expenditures (capex) relating to AI”. Under Roubini’s baseline Goldilocks scenario, the implications for gold are broadly consistent with the World Gold Council’s macro-consensus case. A brief period of below-trend growth followed by recovery, easing monetary policy, and a gradual disinflation toward target imply declining or capped real rates rather than a sustained rise, while policy and geopolitical uncertainty remain unresolved. In this environment, gold does not require crisis conditions to perform; instead, it retains its role as a portfolio stabiliser and store of value, remaining rangebound at historically elevated levels rather than entering a sustained drawdown. The Goldilocks outcome, in other words, is not a gold-negative regime, but one in which gold consolidates its gains as macro stability is achieved through continued policy accommodation rather than a restoration of pre-crisis monetary normality.
Central Bank Demand Provides a Durable Structural Floor
In their June 2025 survey of central banks, the BIS found that 95% of respondents expected central bank gold reserves to increase in the subsequent 12 months, with 43% expecting their own reserves to increase. No respondent planned to decrease their gold reserves. Furthermore, 73% of respondents expected the share of U.S. dollar holdings to decline over the next five years, with other currencies and gold increasing as a share of global reserves. Subsequent data shows that central banks have continued to purchase gold. In October, the last month for which we have data, central banks bought 53 tonnes of gold, up 36% month-over-month (m/m). In the year-to-date (YTD), central banks have made 254 tonnes of net purchases of gold. Even so, gold purchases in 2025 trailed those of previous years.
Source: World Gold Council
The National Bank of Serbia expects to nearly double their gold reserves to 100 tonnes by 2030, while Madagascar and South Korea are planning to increase their gold reserves as well. Central banks are expected to continue being net purchasers of gold in 2026, even if they believe that gold is in bubble territory. This is driven by gold’s superior performance in times of uncertainty.
If gold prices remain rangebound at historically elevated levels rather than reverting, the relevant question shifts from directionality to operational leverage and capital discipline among producers.
Gilded Profits
In the current regime, Apex Mining and Greatland Resources have earned attractive profits. In my initial thesis on Apex Mining, I said that the company was a “child of the bull run”, observing that,
Present-day Apex Mining was given new life by this bull run. In its Q1 2025 filing, the company reported an ore grade for the Maco Mines of 3.16 grams of gold per tonne of ore (g/t Au), a grade that is not what one would deem high-grade. When I started, 6g/t was generally considered workable, and the mine often reached 12g/t, and never lower than 7g/t. If the current grade reflects realities in 1991, it is likely the reason why the mines had to be mothballed.
Management has expertly exploited this bull run. Since 2020, Apex Mining’s revenue has compounded by 25.65% a year, from ₱6.32 billion in 2020 to ₱19.76 billion in the last twelve months (LTM), compared to a global mean and median 5-year sales CAGR of 6.9% and 5.2% respectively. Since 2020, Apex Mining’s net operating profit after tax (NOPAT) has compounded by 36.37% a year, from ₱1.63 billion to ₱7.7 billion. NOPAT margin in that period averaged 31.18%, rising from 25.85% to 38.92%. Apex Mining’s rising NOPAT margin has occurred in tandem with an improvement in its balance sheet efficiency, with invested capital turns ticking up from 0.55 to 0.69 in that time. The result of rising NOPAT margins and invested capital turns has been a marked swelling in Apex Mining’s return on invested capital (ROIC) from 14.25% to 26.94%. In that period, Apex Mining’s incremental ROIC has averaged 147.81% and has always been positive, last dipping below 5% in 2021, and currently standing at 51.6%.
In my initial thesis on Greatland Resources, I observed that the acquisition of the Telfer Mine had been transformational, saying,
Seven months after the acquisition, Greatland had produced 198,319oz gold, and 8.43kt copper at an all-in-sustaining-cost (AISC) of A$1,849/oz Au, net of copper credits, selling 180,570oz of gold at an average realised price of A$4,785, and lifting [NOPAT] from -A$26.56 in FY 2024 to A$319.23 million in FY 2025, and NOPAT margins to 33.34%. Despite invested capital rising nearly six-fold, the firm’s balance sheet efficiency rose, with invested capital turns rising from 0.00 to 1.21. As a consequence, Greatland Resources’ [ROIC] shot up from -19.20% to 40.44%. Such has been the success of the acquisition that within those first seven months, cash flow from Telfer’s operations, A$601.1 million, had exceeded the A$541 million upfront acquisition consideration for both Telfer and Havieron.
These are the sorts of numbers that one would normally expect from asset-light aggregators and platforms, not from asset-heavy gold mines.
Value Creators
Since Alfred Marshall’s Principles of Economics, economists have known that value is created when returns are in excess of the cost of capital. Both Apex Mining and Greatland Resources are value creators. Since 2020, Apex Mining has compounded economic profit—(ROIC-WACC)*average invested capital—by 45.13%, from ₱702.13 million to ₱4.52 billion.
Having gone public earlier this year, Greatland Resources has generated A$250.68 million in economic profit for FY 2025.
Apex Mining is Trading at Near-Economic Book Value
At the current share price, ₱11.92 at time of writing, Apex Mining has a price-to-economic book value (PEBV) of 1.04, implying that the market expects just an at-most 4% increase in its NOPAT from current levels.
Using my reverse discounted cash flow model (DCF), I teased out the expectations implied by the current share price.
In the first scenario, I determined the hurdles revenue and NOPAT growth must meet to justify the current price. There,
- revenue compounds by 15% a year, and
- NOPAT margin remains at 38.92%.
In that scenario, the company’s market-implied competitive advantage period (MICAP) is 9 years, at which point its shareholder value per share equals the current share price. In this scenario, the company earns ₱61.26 billion in revenue and ₱20.35 billion in NOPAT, by the end of 2034.
If, however, those price-implied expectations are exceeded, and,
- revenue compounds by 25.65%—its 5-year CAGR—, and
- NOPAT margin remains at 38.92%, then,
Apex Mining earns ₱118.21 billion in revenue and ₱39.26 billion in NOPAT by the end of 2034, and the stock is worth ₱25.83 today, an upside of 117.06% from the present price.
There is evidence from VanEck that suggests that as gold prices climb, gold miners margins climb as well; and evidence from Farmonaut that investments by 60% of gold miners into new tech will likely lead to greater operational efficiency. PwC, on the other hand, have pointed to cost pressures pushing margins down in mid-2025, although, my analysis shows Apex Mining gaining in that time. Apex Mining’s investments into operational improvements, such as equipment upgrades, drain tunnel developments, and use of training simulators, should continue to boost efficiency, support ongoing production targets, and, at a minimum, weigh against the cost-pressures discussed by PwC.
Greatland Resources Still Has Upside
At the current price, A$9.68 at time of writing, Greatland Resources has a PEBV of 1.23, implying that the market expects the firm to increase its NOPAT by 23% from FY 2025 levels. Using my reverse DCF model, I determined the market-implied expectations for future cash flows.
In the base case, where,
- revenue compounds by 10% a year, and,
- NOPAT margin remains at 33.34%
Greatland Resources earns A$1.87 billion in revenue and A$622.08 million in NOPAT by the end of FY 2032, and has a MICAP of six years.
If, however, those hurdles are exceeded, and,
- revenue rises to A$1.64 billion in FY 2026, based on a full year’s worth of production at FY 2025 prices, and grows by 10% a year thereafter, and,
- NOPAT margin remains at 33.34%, then,
Greatland Resources earns A$2.9 billion in revenue and A$969.48 million in NOPAT, by the end of FY2032, and the company is worth A$14.45 today, an upside of 49.28% from the current price.
When the Centre Fails, Prices Adjust
If Yeats’ widening gyre captures a world losing coherence, gold is not its anachronism but its stabiliser. In an era in which geopolitics encroaches upon economics, fiscal dominance constrains monetary normalisation, and tail risks remain persistently elevated, gold’s price is best understood not as speculative excess but as an equilibrium response to structural uncertainty. The centre cannot hold—but markets do not require order to function; they reprice the cost of stability. In this regime, gold miners are no longer simply leveraged expressions of spot prices, but conditional claims on persistence: on policy constraint, geopolitical fragmentation, and higher risk premia becoming durable features rather than transient shocks. Apex Mining and Greatland Resources exemplify this distinction. They are generating economic profits consistent with the prevailing regime, yet are valued as though a rapid return to pre-crisis normality were imminent. To label such outcomes a bubble is to misdiagnose the moment. When coherence erodes, value accrues not to conviction alone, but to assets—and firms—that can earn returns in a world where the centre no longer holds.