Ninepoint Partners Senior Portfolio Manager Nawojka Wachowiak said gold's recent correction represents a pause in a broader bull market rather than the start of a new bear cycle. The portfolio manager argued that structural forces supporting gold remain intact despite short-term headwinds from Federal Reserve policy and U.S. dollar strength. Ninepoint's mid-year outlook, published last month, described the pullback as a healthy correction that has created attractive buying opportunities in both bullion and mining equities while central bank demand continues to provide a floor beneath the market.
Central Banks Provide $4,000 Floor Through Physical Demand
Wachowiak told Kitco News that gold's ability to hold above $4,000 an ounce during the correction demonstrates significant physical market support. She said central banks remain on pace to purchase roughly 1,000 tonnes of gold this year, equivalent to approximately 15% to 20% of annual mine production. "If you have a buyer of that magnitude that steps in on pullbacks, you are going to find a floor," Wachowiak stated. She added that the resilience became evident when gold briefly fell below $4,000 before quickly recovering, with physical buyers stepping in during the weakness.
Gold Miners Trade at Eight Times EV/EBITDA Despite Strong Margins
Wachowiak said mining equity valuations have become disconnected from company fundamentals during the correction. She estimates many producers currently trade at roughly eight times EV/EBITDA at current gold prices, falling to around six times earnings if gold returns to $5,000 an ounce. "We're at bargain-basement valuations," she said. "It just tells you that the money hasn't really flowed in yet." Ninepoint's outlook states that many gold equities continue to trade below historical valuation averages even as profit growth is expected to continue outpacing cost inflation.
Producers Generate $3,000 Per Ounce Margins at Current Prices
The portfolio manager said gold producers are currently generating roughly $3,000 an ounce in all-in sustaining cost margins at $4,000 gold. "We're still printing money at $4,000," Wachowiak stated. She noted that although rising energy prices could add between $70 and $95 an ounce to operating costs—and potentially lift industry costs by as much as 20% over the next year if oil prices remain elevated—the current gold price more than offsets those headwinds. Wachowiak added that many producers entered the recent energy price spike with fuel hedges and inventories purchased at lower prices, limiting immediate impact.
Mining Companies Maintain Disciplined Capital Allocation
Wachowiak said the gold mining industry is operating in the strongest financial environment in its history. She stated that producers have no debt and continue to return capital through buybacks and dividends while pursuing acquisitions that enhance value rather than simply adding production. "From a health perspective, this is a very, very healthy market, and it's a very healthy gold industry," she said. The portfolio manager added that companies are maintaining conservative mine plans and investing in exploration rather than sacrificing profitability through lower-grade production additions.
FAQ
What did Nawojka Wachowiak say about gold's recent correction?
Ninepoint Partners Senior Portfolio Manager Nawojka Wachowiak said gold's recent correction represents a pause in a broader bull market rather than the start of a new bear cycle. She stated that structural forces supporting gold remain intact despite short-term headwinds from Federal Reserve policy and U.S. dollar strength.
How much are central banks buying in the gold market according to Ninepoint?
Wachowiak said central banks remain on pace to purchase roughly 1,000 tonnes of gold this year, equivalent to approximately 15% to 20% of annual mine production. She stated this buying provides a floor beneath the market, with physical buyers stepping in when gold briefly fell below $4,000 an ounce.
