Iran Conflict and Energy Price Spikes Merely Delay Gold's Rally to $5,000; Mining Stocks Remain Undervalued – Gabelli

The Iran conflict and energy supply disruptions are fueling inflation and prompting central banks to maintain tight policies that weigh on gold. Chris Mancini of the Gabelli Gold Fund noted that if the situation had been resolved during the summer, gold would likely already be trading at $5,000 an ounce. He sees the current headwinds as temporary, since higher costs will eventually curb economic growth. Mancini expects miners to deliver strong third-quarter profits and robust free cash flow, though some may miss estimates due to rising energy and labor expenses. The latter is the bigger issue, driven by expansion plans at gold prices near $4,000, yet companies are avoiding the reckless spending of past cycles. Despite solid balance sheets and improved capital discipline, mining equities stay undervalued with little interest from generalist investors. Mancini recommends shifting from share buybacks to higher dividends, pointing to Newmont’s roughly $120 billion market cap as an example where reallocating returns could deliver an attractive 8% yield.