Gold miners may offer more upside than bullion: Rational Equity

Sun Sep 20 2026

Global gold mining equities could offer Indian investors a way to participate in the gold rally with additional upside from operating leverage, dividends and buybacks, according to a white paper by Rational Equity Asset Management. The white paper, Beyond Bullion: Why the Miners Are the More Profitable Way to Own Gold’s Bull Run, argues that stronger balance sheets, healthy cash flows, limited supply growth and relatively attractive valuations are creating an opportunity in mining stocks.

Miners have outperformed gold

The performance gap between bullion and mining equities has been significant since the 2023 gold breakout. According to Rational Equity, ₹1 lakh invested in physical 24K gold in India in August 2023 would have grown to ₹2.30 lakh. The same investment in a domestic Gold ETF would have become ₹2.53 lakh, while an investment in the VanEck Gold Miners ETF (GDX), converted into INR, would have grown to ₹3.77 lakh.

The firm believes miners can benefit disproportionately when gold prices rise because higher metal prices can translate into stronger margins and cash flows for mining companies. Rational Equity estimates free-cash-flow yields of 8–10% for large-cap miners and 15–35% for mid- and small-cap miners at a gold price of $4,500. It also points to dividends and buybacks as additional sources of shareholder returns.

Supply constraints support the thesis

The paper argues that gold’s recent re-rating is structural. While gold prices have more than doubled since 2023, mined supply has grown by only around 1%.

Central banks are also continuing to accumulate gold. Rational Equity cites the World Gold Council’s 2026 survey, which found that 84% of reserve managers expect gold’s share of global reserves to rise over the next five years, while 74% expect the dollar’s share to decline. Silver provides another potential source of support. The paper expects 2026 to mark the sixth consecutive year of silver supply deficit, with the shortfall projected at 46 million ounces against 40 million ounces in 2025. Nearly 74% of silver production comes as a by-product of other metals, limiting the industry's ability to rapidly increase supply.

GIFT City opens access for Indian investors

For Indian wealth managers, the paper highlights GIFT City as a potential route to global mining-equity exposure.

According to Rational Equity, resident HNIs and NRIs can access global gold-mining strategies through IFSCA-regulated structures, including feeder funds and Category III AIFs. These structures can provide access to global managers and foreign-currency investments. The firm suggests that mining equities should be considered a satellite allocation alongside physical gold and Gold ETFs, rather than as a replacement. Unlike bullion, mining equities carry equity-market and company-specific risks, although they can provide capital appreciation, dividends and buybacks.

Source: https://cafemutual.com