Mining Videos

Rick Rule: The Gold Math Wall Street Gets WRONG #Gold #Mining #Stocks

Rick Rule argues that Wall Street’s gold‑mining models dramatically misprice the sector. He compares a realistic gold price of $5,000 per ounce to the $3,500 benchmark used by analysts, while noting median all‑in sustaining costs of $2,000, meaning operating expenses consume roughly half of revenue. He highlights that oil accounts for about 30% of a mine’s OPEX, so a 30% rise in oil prices only adds roughly 9% to total operating costs. By contrast, the gold‑price assumption is off by 20‑25%, creating a far larger valuation gap than the modest cost increase. Rule emphasizes the absurdity of the math, saying, “the arithmetic is solidly farcical,” and points out that investors are focusing on a small 8‑9% cost escalation while ignoring a 20‑25% gold‑price underestimation. This discrepancy, he suggests, inflates the upside potential for mining equities. The takeaway for investors is clear: current market caps may significantly undervalue gold‑mining firms, presenting a compelling entry point for those who adjust their models to reflect higher gold prices and realistic cost structures.