Why gold mining stocks are outperforming the S&P 500 in 2026

Gold mining stocks outperforming the S&P 500 isn't a headline anymore — it's a year-long trend, and the math behind it is more boring (and more durable) than most investors think.

Why miners are beating bullion (and the index)

Most investors who watch gold mining stocks outperforming the S&P 500 assume the answer is simply “gold is up.” That's only half the picture. Gold the metal is having a strong year, but a passive bullion ETF doesn't come close to what well-run producers have delivered. The reason is structural: miners are an operating business sitting on top of a commodity, and when that commodity moves while unit costs stay flat, every incremental dollar of revenue drops almost straight to the bottom line.

That dynamic has been building for two years. The producers in our book reported all-in sustaining costs (AISC) in a band that has barely moved since 2024. Energy is well off its 2022 highs, labor has stabilized in most jurisdictions, and the major capex bulges from the last build cycle have rolled off. Meanwhile the gold price has re-rated. The gap between revenue per ounce and cost per ounce — the part that actually matters for equity holders — has widened by more than the gold price itself has moved.

The margin-expansion math

Here is the simple version. Imagine a producer with AISC of $1,400 and a gold price of $2,000. Margin per ounce: $600. Now move gold to $2,600 with AISC unchanged. Margin per ounce: $1,200. The gold price moved 30%, but per-ounce margin doubled. Earnings roughly track that margin line, so earnings growth in this stylized example is closer to 100% than 30%.

That's the core of operating leverage in producers, and it's why a basket of miners can outpace bullion in any year where AISC behaves. It's also why miners are punishing on the way down: when the gold price compresses by 20% against flat costs, earnings can fall 50%. The leverage runs both directions. We size accordingly, and we'd encourage anyone reading this to do the same.

Our gold mining positions

We hold a small basket of producers and a closed-end fund, sized so that no single name dominates the portfolio. The point isn't to bet the farm on bullion — it's to own a focused, high-quality slice of operating leverage to gold while the margin backdrop remains favorable.

AGI and AEM are core senior/intermediate producers and reflect the cleanest version of the margin-expansion thesis — high-quality assets in stable jurisdictions, AISC in line with guidance, and balance sheets that don't require capital raises to fund growth. ASA is a closed-end vehicle that gives basket exposure with a discount/NAV wrinkle that has worked in our favor. IAG and ORLA are smaller operators with more idiosyncratic risk; they're sized smaller for that reason.

The other “metals” trade: CRS at +470%

We want to flag this clearly: CRS (Carpenter Technology) is not a gold miner. It's a specialty alloys producer serving aerospace and defense end markets. We include it here because it shares a thesis with the gold basket — a real-assets, hard-to-replicate, supply-constrained industrial business with pricing power — even though the underlying commodity is completely different.

Entered on 2024-01-02, CRS is up +470.68% and is one of the eight stocks that more than doubled during our walk-forward backtest window. We're mentioning it in the same article because investors interested in gold miners are usually also thinking about real assets and supply-constrained industrials, and CRS is the cleanest expression of that adjacent theme in our book.

How to size a miner basket

Gold miners are leveraged calls on a volatile commodity. Even with margins working in your favor, drawdowns of 30-50% inside a calendar year are normal in this group. The single most common mistake we see is putting too much capital into miners after a strong run, then getting forced out at the wrong time when the cycle turns.

• Cap total miner exposure at 15-20% of the portfolio at most.
• No single miner above 4-5% of the portfolio at cost.
• Mix seniors and intermediates; avoid concentrating in juniors.
• Pay attention to jurisdiction risk — mines in unstable regions can lose value overnight regardless of the gold price.
• Decide your exit rule before you enter, not after the position has doubled.

For a longer discussion of how we think about position counts and portfolio construction, see our piece on how many stocks you should hold to beat the market.

Risks and what could break the thesis

The bear case for miners is straightforward: gold rolls over, AISC creeps up because of energy or labor costs, or a specific operator hits a production miss. Any one of those things can compress earnings fast, and miner equities will price the bad news in days, not quarters. There's also jurisdiction risk — mining is still a permission-based business, and governments change the rules.

For more on how we think about active risk versus passive index exposure, see alpha vs beta: what active stock picking actually buys you. And if you want to see the broader system, our entire approach is documented in walk-forward backtesting explained.

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