Gold jumped more than 7% in the week ending August 7, one of best weeks since 1990. That’s the news many of you read.
What didn’t make the headlines is what happened to the companies that pull the metal out of the ground. The NYSE Arca Gold Miners Index rose over 20% in the same week. In the 22 years since that index launched, only one week has been better: December 12, 2008, when the financial system was falling apart.
As someone who’s been in the business for 40 years, I can tell you a move like that usually means one of two things. Either something is badly broken, or the market has been asleep on something and just woke up.
In this case, I believe it’s the second one.
Gold Is Defying Its Biggest Headwind
Why do I say that? Historically, gold has struggled when real interest rates rise, because the metal pays you nothing and Treasurys start paying you something. Right now, the 10-year real yield sits around 2.43%, near the top of its three-year range and up roughly 75 basis points since February.
Well, guess what? Gold rallied anyway.
A decline in the U.S. dollar helped, but the rate story didn’t cooperate at all. When as asset goes up while its main headwind is getting stronger, that tells you the buyers aren’t there for the reason they should be. Central banks have been accumulating. So have people who’ve noticed what’s happened to the purchasing power of the money in their wallet.
The Buyers Aren’t Chasing Gold… Yet
The most interesting thing about this rally, I believe, is how few people are in it.
Managed money—the hedge funds and futures speculators who normally pile into a hot trade—held 215,567 net long gold contracts back in February 2025, when gold traded near $2,904. As of the end of July 2026, with gold near $4,038, they held 123,586.
That’s 43% less exposure at a price nearly 40% higher.
Look at physical holders and you see the same restraint from the other direction. Gold fell nearly 19% from its February average to July, but total gold held in ETFs fell only 3.8%. People who own the metal watched a 19% drawdown and sold under 4% of their holdings.
Right now, hedge funds don’t appear to be participating, and the people who are here aren’t leaving.
Gold Miners Are Making More and Spending Smarter
Since the third quarter of 2022, the average price senior gold producers received for an ounce has risen 161%. Meanwhile, their all-in sustaining costs (AISC)—which includes sustaining capital, not just the cash cost of digging—rose “only” 53%. The margin, therefore, went from about $521 an ounce to roughly $2,636.
Free cash flow per share across the gold miners index climbed from $9.76 in the third quarter of 2024 to a remarkable $45.69 in the second quarter of 2026. That’s nearly five times in eight quarters. Free cash flow yield went from 2.14% to 5.94%.
Meanwhile, the payout ratio for miners is about 27%, according to Bloomberg data. Dividends have roughly doubled while three-quarters of the cash has stayed inside the business.
If you lived through 2011, you know why I’m pointing this out. Back then, these companies took record cash flow… and lit it on fire. They chased overpriced acquisitions, vanity projects and share issuances that diluted shareholder value. Today appears to be a more rational business environment.
Picking the Right Mines Matters
Not every miner is paying the same amount to extract an ounce of gold, though. Last quarter, Agnico Eagle reported all-in sustaining costs of $1,459 an ounce. IAMGOLD reported $2,271. That’s a 56% difference between two senior producers doing the same job.
For many investors, the question becomes: Which company or companies do I own?
A passive gold mining fund that tracks an index gives you all of them—or nearly all of them—but I don’t see that as a strategy. To me, that’s a coin flip.
What I believe investors should consider evaluating is an actively-managed fund that’s run by a team with decades of experience in the gold mining equity business.
That’s exactly what we offer with our Gold and Precious Metals Fund (USERX).
As of June 30, 2026, USERX held roughly 70 names, including senior, mid-tier and smaller producers, as well as silver exposure. The fund seeks long-term growth of capital plus protection against inflation and monetary instability.
Ready to get started? Explore USERX by clicking here!
Please consider carefully a fund’s investment objectives, risks, charges and expenses. For this and other important information, obtain a fund prospectus by visiting www.usfunds.com. Read it carefully before investing. Foreside Fund Services, LLC, Distributor. U.S. Global Investors is the investment adviser.
Gold, precious metals, and precious minerals funds may be susceptible to adverse economic, political or regulatory developments due to concentrating in a single theme. The prices of gold, precious metals, and precious minerals are subject to substantial price fluctuations over short periods of time and may be affected by unpredicted international monetary and political policies. We suggest investing no more than 5% to 10% of your portfolio in these sectors.
A basis point is a standard unit of measure in finance equal to 1/100th of 1%, or 0.01% (0.0001 in decimal form). The NYSE Arca Gold Miners Index is a modified market-capitalization-weighted index that tracks the performance of publicly traded global companies involved primarily in the gold and silver mining industry. All-in Sustaining Cost (AISC) is a financial metric used in the mining industry to measure the total cost required to produce an ounce or ton of a metal and keep existing operations running. Introduced by the World Gold Council in 2013, it provides a realistic break-even point for miners. Free cash flow yield is a financial ratio that measures a company’s annual free cash flow per share relative to its share price. Expressed as a percentage, it shows how much cash a business generates for each dollar invested, helping investors spot if a stock is cheap or costly. A payout ratio is the percentage of a company’s net income paid to shareholders as dividends. It shows how much profit a business returns to its investors versus how much it keeps to fund growth or pay debts.
There is no guarantee that the issuers of any securities will declare dividends in the future or that, if declared, will remain at current levels or increase over time.
Holdings may change daily. Holdings are reported as of the most recent quarter-end. The following securities mentioned in the article were held by one or more accounts managed by U.S. Global Investors as of (06/30/2026): Agnico Eagle Mines Ltd. 1.91%, Centerra Gold Inc. 1.95%, Alamos Gold Inc. 1.24%, Newmont Corp. 0.68%, AngloGold Ashanti Plc 0.33%, IAMGOLD Corp. 3.73%.
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