There’s Gold in Them Hills: Why Some ASX Gold Miners May Still Be Undervalued

Why Some ASX Gold Miners May Still Be Undervalued

“Gold is money. Everything else is credit.”

– J.P. Morgan

Gold has been on a rampage for some years now, especially in recent months, pushing through all-time highs as investors seek safety from inflation, geopolitical uncertainty, and weakening currencies. Yet while bullion shines, the response from Australian gold equities has yet to fully show the benefits.

A few ASX-listed gold miners have soared, but in general, most companies are still not displaying a share price that reflects the benefits of the operational leverage they are currently enjoying, and there-in lies the opportunity.

The Big Disconnect: The gold price has surged but many gold miners have a lot of catching up to do.

Historically, gold miners tend to outperform gold in bull markets, and this is definitely a bull market. The logic is simple: rising gold prices supercharge their profit margins, often resulting in exponential earnings growth. But this time, the relationship has been more selective and the across the board surge is yet to occur.

While gold has rallied strongly, a subset of ASX-listed miners has delivered stifled gains.

It appears that investor caution is the main factor holding back the stock prices that should be reflecting the upside that the surge of the price of bullion has offered. Many companies have yet to capture the upside that their gold deposits has offered.

This disconnect is likely to be temporary, and for investors looking for an opportune risk-reward setup, that’s where things get interesting.

Why ASX Gold Miners Should Catch Up

There are several macro and micro catalysts that could trigger a revaluation for underperforming gold miners, comparative to the ongoing gold rally of recent years:

• Stabilising Costs: Energy, freight, and wage pressures are starting to ease in Australia. Lower input costs could improve margins, especially for companies with fixed hedges rolling off.
• Sentiment Shift: As momentum returns to the commodity space, investors may rotate out of tech-heavy trades and seek value with gold exposure.
• M&A Tailwinds: Larger producers flush with cash may target juniors or mid-tiers with quality ounces in the ground, potentially lifting prices across the board.
• Earnings Surprise Potential: With gold near record levels, even modest operational improvements could surprise the market.

Where Will the Dust Settle?

Gold’s rally has made headlines, but the real story might be where the market hasn’t looked yet. While the spotlight is on the producers that have already doubled, the next leg of this bull market could reward those who go deeper.

Some miners are still buried in noise, operational hiccups, sentiment overhangs, or cost scars from the past. But under the surface there are strong assets with solid cash flow potential and leverage to gold that hasn’t been priced in.

This isn’t about buying what’s hot… it’s about buying what’s next.

Gold miners are ripe for the picking, and not just ASX miners. It could be argued there are better opportunities globally, too, which can be accessed through the Macro Global Markets platform, along with your ASX favourites.

What are the Best ASX Gold Stocks to invest in right now?

Check our ASX stock buy/sell tips