Dunkley contends that the structural bull market for gold remains unchallenged because policymakers have effectively abandoned the possibility of allowing recessions or meaningful economic downturns. By maintaining negative real interest rates to manage ballooning debt, governments are effectively forcing a policy of monetary debasement. This environment creates a permanent tailwind for gold, which has historically served as a reliable store of value against persistent expansionary policies.

While bullish on the metal, Waratah Capital is currently concentrating its portfolios on mining equities rather than physical bullion. Dunkley notes that producers are trading at valuations that discount a gold price significantly lower than current spot levels, providing investors with a substantial margin of safety. Many of these firms are generating stellar free cash flow margins and carry net cash positions, yet they remain largely ignored by generalist investors who are currently preoccupied with broader equity market gains.

Targeting the Canadian mining sector

Waratah’s strategy focuses on established Canadian producers, including Artemis Gold, Alamos Gold, and IAMGOLD. According to Associate Portfolio Manager Grant McAdam, Canada offers a necessary layer of jurisdictional security in an industry where operational challenges are already significant. As senior producers face the inevitable need to replace declining reserves, the firm expects a wave of consolidation to further bolster the value of these stable, high-quality assets. Dunkley suggests that once traditional equity sectors begin to struggle, the gold mining industry will likely mirror the performance seen during the commodity cycles of the 1970s.