April 01, 2025

Dave Erfle - Q1 Gold Surge, Miner Margins, Why Have Stocks Lagged For 20 Years?

24 minutes

Dave Erfle, Editor of the Junior Miner Junky joins us to break down a remarkable Q1 for the precious metals sector - and what it could signal for the quarters ahead.

Key discussion highlights:

Gold’s record-breaking quarter: Gold posted its best quarterly performance in 39 years, closing Q1 up ~17%, while major mining ETFs like GDX surged ~35%, far outpacing broader market indices that struggled through their worst Q1 since 2022.

Profit margins hit historic highs: Gold producers saw margin expansion with some like Agnico Eagle achieving all-in sustaining costs below $1,300/oz vs. gold prices nearing $2,900/oz.

Investor capital still favoring gold ETFs over miners: Despite strong performance, Dave notes generalist investors are still hesitant to rotate into mining stocks, preferring the simplicity and perceived safety of gold ETFs. Low volumes in GDX/GDXJ reinforce that this trend hasn't fully shifted.

Structural issues in gold equity performance: The launch of ETFs like GDX and GDXJ coincided with the sector’s long-term underperformance vs. the gold price. Outside of short bursts in 2008, 2016, and 2020, gold stocks have lagged behind, prompting the question: can the trend reverse?

Outlook for retail interest and sector rotation: Dave emphasizes that a return of retail investors and increased fund allocation are key to sustaining the rally in miners. With the broader market weakening, he sees a growing opportunity for rotation — but it hasn't materialized in full force yet.

Silver’s critical level and broader sector leverage: Silver needs to break and hold above $35/oz to ignite the next leg up, particularly for silver equities and high-beta junior miners. Until then, performance will likely remain selective and stock-specific.

Click here to visit the Junior Miner Junky website to learn more about Dave’s investment letter.

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