Gold miners might be set for one of the most explosive earnings seasons in decades, as record bullion prices ran away from relatively stable operating costs. With gold having delivered the strongest annual performance since 1979, miners could make the headlines as they start reporting by mid-February.
"Despite the fact that the strategists on Wall Street and Bay Street are characteristically talking about $5,000 and $6,000 an ounce, the analysts are using $3,200 in their earnings forecasts," veteran investor Rick Rule warned in a recent interview with Jay Martin.
The disconnect, Rule argues, leaves the market materially underestimating how strong miners' earnings could be.
Timing The Surprise
Timing matters. In the United States, American-listed gold miners have up to 60 days after year-end to report fourth-quarter results, while Canadian-listed companies have up to 90 days. As a result, the bulk of earnings releases will arrive between mid-February and mid-March, compressing what is likely to be a string of upside surprises into a short window.
Still, the underlying math is straightforward. When gold prices surge far faster than costs, margins expand dramatically. All-in sustaining costs (AISC) for most gold mines are largely fixed once operations are built, rising only gradually with inflation. Gold prices, by contrast, are highly volatile.
In the fourth quarter, gold averaged roughly $4,150 an ounce, up about 56% year-on-year, while industry AISC rose by only a mid-single-digit percentage. The result is a near-vertical increase in unit profitability.
Mid-Tier Example
Such examples are well evident among mid-tier producers such as Alamos Gold Inc. (NYSE:AGI). Using the midpoint fourth-quarter production of about 167,000 ounces and an assumed realized gold price near $4,100 an ounce, revenue would jump sharply year-on-year. With AISC estimated at roughly $1,306 an ounce, slightly lower than a year earlier, the margin per ounce could rise more than 115% compared with the fourth quarter of 2024.
On that basis, Alamos' total AISC margin for the quarter could expand to roughly $467 million, up from about $182 million a year earlier. Applying a similar free-cash-flow conversion rate to last year suggests a potential fourth-quarter free cash flow of around $137 million, compared to $53.5 million previously. That's a huge difference, resulting almost entirely from gold price leverage.
Although volatility looms, the macro conditions remain supportive. In the latest note, HSBC raised its gold price target to $5,050 for the first half of 2026, yet warned about the high anticipated volatility.
"We see a wide range of $5,050 to $3,950 per ounce," HSBC analysts wrote, citing geopolitical risk, central bank demand, and ETF inflows as ongoing tailwinds.
Price Watch: VanEck Gold Miners ETF (NYSE:GDX) is up 6.29% year-to-date.
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