(Kitco News) - Gold equities – particularly junior miners – remain deeply undervalued, even as gold hovers near record highs above $3,400 an ounce, according to Michael Gentile, Co-founder of Bastion Asset Management.
“We’re seeing record margins, pristine balance sheets, and major producers buying back stock,” Gentile said in an interview with Kitco News on the sidelines of the Mining Investment Event of the North in Quebec City. “Yet the junior resource sector is still trading like gold is $1,500.”
Despite silver breaking above $34 and broader metals momentum, Gentile emphasized that institutional and retail flows into mining stocks remain “shallow.” He expects a lagged response that could trigger an “explosive rally” in smaller-cap names as capital filters down from large producers.
He added: “If you’re as bullish as I am on the gold sector, reaching down to the sub-hundred-million-dollar mark cap stocks, you can see some explosive returns … That’s where you can make 3, 4, 5, 10 times your money. But there’s a lot more risk there, a lot more failure rates, so you gotta have a diversified portfolio.”
Gentile also highlighted a coming wave of M&A, as majors look to replenish depleting reserves after years of underinvestment. “They’ve starved their exploration budgets since 2012. We're going to see a big M&A cycle, and that should kick off a better rally in the junior small-cap names.”
On the policy front, Gentile noted Donald Trump’s reversal of Biden-era drilling bans in Alaska as a key tailwind for U.S.-based critical mineral development. Meanwhile, he criticized Canada’s permitting delays, saying it can take up to 29 years to bring a mine from discovery to production.
“If we shorten that to 10-15 years, the value of these deposits goes way, way up,” he said, calling recent political momentum in Canada around resource development a much-needed trigger.
While geopolitical risks in jurisdictions like Mali and the DRC remain a concern, Gentile believes many of these are already priced in and manageable.
Looking ahead, he sees the greatest upside in junior miners and mid-tier producers. “ I'm more bullish on the gold equities now than I am on the actual gold price. To me, at this level of gold prices, industry is fantastically profitable. If gold prices go sideways for the next 12 months, the gold equities are going to do fantastically well.”
Are institutions about to flood back into gold stocks? Watch the video above for insights.
Special thanks to our sponsor, West Red Lake Gold Mines, for making this coverage possible. To learn more, visit: https://westredlakegold.com/
