Sprott is a Toronto-headquartered asset manager specializing in precious metals and critical materials (NYSE/TSX: SII), tracing its roots to Sprott Securities founded by Eric Sprott in 1981 and now led by CEO Whitney George. It runs physical gold, silver and uranium trusts, ETFs, active strategies and resource lending, with about $65bn in AUM. The Insights column carries monthly commentaries and white papers on uranium, gold, silver, copper and critical materials by Paul Wong, Jacob White and John Hathaway (ex-Tocqueville gold manager) — note the house's structurally bullish commodity stance, as it sells the corresponding trusts and ETFs.
This report says gold and silver prices surged in 2025, but gold mining stocks did even better—up over 50% year-to-date. Oddly, investors kept selling mining ETFs (like GDX and GDXJ, whose shares shrank 20%), even though mining companies' earnings jumped about 80%. Wall Street's price forecasts for gold lag far behind reality. That means mining stocks are still cheap relative to their profits, and market pessimism may be overdone. For ordinary investors, this could be a contrarian buying opportunity—the fundamentals are strong while sentiment is weak. Worth reading because it explains why the gold mining bull market may have further to run.
Sprott’s report notes that precious metals mining stocks have performed strongly. As of July 31, 2025, the NYSE Arca Gold Miners Index (GDMNTR) has risen 51.59% year-to-date, significantly outpacing gold’s 25.35% and silver’s 27.03%. The core argument is that Wall Street continues to use conservativ
This chapter focuses on the volatile performance of the precious metals market in July 2025 and the significant gap between Wall Street analysts' conservative forecasts for gold and silver prices and market reality. The report notes that despite sharp fluctuations in gold and silver prices in July (gold hit an all-time high of $3,431.48 on July 22 before retreating to $3,289.93, while silver touched $39.40 before falling to $36.71), the foundation of the precious metals bull market remains solid, with mining stocks significantly outperforming the metals themselves.
The author's core investment argument is: Wall Street's forecasts for gold and silver prices are severely lagging behind the market, creating room for substantial upward revisions in mining stock earnings, while mining stocks remain undervalued at current levels, and the precious metals stock bull market is far from over. The counterintuitive judgment lies in the fact that despite mining stocks rising over 50% year-to-date, investor capital is still flowing out (shares outstanding of GDX and GDXJ have fallen over 20% and 22%, respectively), presenting a contrarian buying opportunity.
1. Mining Stocks Significantly Outperform Metals: As of July 31, 2025, the NYSE Arca Gold Miners Index (GDMNTR) has risen 51.59% year-to-date, while gold has only gained 25.35% and silver 27.03%. Mining stocks provide significant "operational leverage."
2. Wall Street Forecasts Severely Underestimate: As of June 30, 2025, market consensus forecasts for gold and silver prices are far below spot prices and the forward curve. The report presents forecast discrepancies for 2025-2028 in a table (original Figure 2).
3. Earnings Expectations Sharply Revised Upward: Earnings expectations for 2025 for the large-cap precious metals mining index (GDMNTR) have been astonishingly revised up by approximately 80% (original Figure 3).
4. Valuations Remain Low: Despite the significant rally, gold mining stock valuations still lag behind gold itself (original Figure 4). Historically, the two are highly correlated, but they are currently decoupled.
5. Divergent ETF Fund Flows: Gold ETF holdings have increased 9.99% year-to-date, and silver ETF holdings have increased 10.19%, but mining stock ETFs (GDX and GDXJ) have experienced net fund outflows, indicating that investors remain underweight mining stocks.
Comparative Data Table (based on the implied logic of original Figures 2 and 3):
| Indicator | Year-to-Date 2025 Gain | Key Observation |
|---|---|---|
| Gold Spot | 25.35% | Hit an all-time high of $3,431.48 on July 22 |
| Silver Spot | 27.03% | Reached a high of $39.40, the highest since 2011 |
| NYSE Arca Gold Miners Index | 51.59% | Earnings expectations revised up by approximately 80% |
| GDX ETF Shares Outstanding Change | -20% | Capital outflow, a contrarian signal |
| GDXJ ETF Shares Outstanding Change | -22% | More severe capital outflow from junior mining stocks |
This chapter focuses on the anomalous phenomenon of a continuous decline in the number of shares outstanding for precious metals mining stocks (represented by GDX and GDXJ) against a backdrop of significantly improved fundamentals. The report draws a parallel between this phenomenon and the historical behavior of gold and silver ETFs before 2025, when these ETFs experienced capital outflows despite rising prices, suggesting a divergence between current market sentiment and fundamentals.
The author’s central judgment is that precious metals mining stocks are in a "bargain bin" — despite a strong start to 2025, the precious metals bull market remains in its early stages. The current reduction in mining stocks’ shares outstanding (reflecting capital outflows or redemptions) contrasts sharply with robust earnings growth and low valuations, presenting a prime contrarian buying opportunity for astute investors. The author explicitly states, "We continue to strongly recommend precious metals stocks and physical precious metals."