| Katusa's Investment Insights | | Gold’s Secret Panic By Marin Katusa | | | Dear Reader,
It happened QUICK.
Gold miners are quietly panicking—and their actions are sending a clear warning.
At the start of 2024, few investors believed gold could touch $3,000 per ounce. Yet this week, that barrier didn't just break—it shattered. Rising inflation, global tensions, and central bank buying sparked a gold rush.
In a record-setting year, over $19 billion poured into gold mergers and acquisitions in 2024.
With massive profit margins on their backs, these companies had war chests full of cash. And they weren’t afraid to spend it.
Big miners like Northern Star and Gold Fields stopped risky exploration and quickly bought proven mines in Australia and Canada. - Beneath this billion-dollar frenzy lies an uncomfortable truth: miners believe gold's record-breaking prices might never return to lower levels.
And could surge further still.
Gold Dominates, But Copper Reignites
Gold was the driving force behind mining M&A in 2024.
As prices kept climbing, miners steered away from risky new projects and instead snapped up proven gold assets, securing reserves while market conditions were in their favor.
Of the 62 qualifying deals, 43 were gold-focused, confirming the metal’s continued allure amid geopolitical risks and elevated prices.
Australia, particularly Western Australia, saw multiple big-ticket acquisitions.
The star was Northern Star Resources Ltd. snapping up De Grey Mining Ltd. for $3.26 billion, accounting for a sizable chunk of the year’s total gold M&A.
At the same time, Canada caught the attention of heavyweight producers like Gold Fields Ltd., which bought Osisko Mining Inc. for $1.42 billion.
It was another signal that seasoned miners prefer established assets over greenfield gambles.
This trend wasn’t just happening in mining deals; it was playing out in the markets too.
As gold prices kept climbing, big investors rushed into gold-backed funds, doubling down on the metal’s strength in 2024.
The chart below shows how ETF demand surged across major regions, moving in step with gold’s rise.
| | | Gold wasn’t the only metal drawing attention, copper also saw increased deal-making.
The standout? Lundin Mining and BHP’s $3.03 billion takeover of Filo Corp.
War Chests Loaded: The $3,000 Gold Effect on Mining Deals
One big catalyst behind gold’s continued dominance is the near $3,000-per-ounce price reached late in the year.
Most gold mines have costs around $1,200–$1,400 per ounce. At current prices, miners earn profits of up to $1,800 per ounce. That's huge.
Such generous margins allow producers to reinvest heavily in operational expansions or acquisitions, thereby driving increased M&A activity.
But Gold Miners Aren’t the Only Ones Stockpiling…
Physical demand is surging, and COMEX inventories are running low. That’s a recipe for even higher prices and more urgency for miners to secure supply.
The chart below tracks daily changes in COMEX gold stockpiles.
- After a brief buildup in late 2024, inventories started shrinking fast in early 2025, a clear sign that physical gold demand is surging.
| | Gold Miners, the New Margin Monsters
Miners facing higher input costs (fuel, labor, consumables) still see solid profit margins at $3,000 gold, making it easier to justify large outlays for new projects or company takeovers.
In fact, several gold miners are open to acquisition as long as the margin between AISC and the spot price remains above $1,000 per ounce.
The next chart illustrates how AISC margins have expanded across different price levels, showcasing why miners are in a strong position to deploy capital into acquisitions.
| | | This margin cushion gives them an insurance policy against short-term price fluctuations. And allows them to engage in deals they might have shied away from when gold was below $2,000.
The result? Plenty of “war chests” for gold miners eager to snap up profitable, lower-cost mines in stable jurisdictions.
If these near-record margins stick around, analysts anticipate a string of “bolt-on” acquisitions. These are transactions that enhance existing portfolios with near-producing or producing assets.
For buyers, it’s about locking in future cash flow while prices are high; for sellers, it’s an opportune moment to exit at a valuation that factors in gold’s extraordinary margins. - In other words, $3,000 gold has made deal-making far less risky for both sides.
The margin cushion offsets potential cost overruns or operational hiccups.
As long as AISC remains significantly below spot, expect gold M&A to remain robust heading into 2025.
Glimpses of 2025: Rising Tensions, Rising Deals?
There’s growing geopolitical pressures…
A mix of lingering European conflicts, shifting trade alliances, and supply chain jitters which could elevate both gold and copper prices further in 2025.
Many insiders foresee more safe-haven gold deals, while copper remains the metal of choice for those targeting the energy transition.
Early signs include Equinox Gold Corp.’s $1.87 billion bid for Calibre Mining Inc., announced in February, reinforcing the idea that this M&A cycle is far from over.
What does it all mean for investors?
Without a single headline-grabbing megamerger, 2024’s data reveal an industry unafraid to seal smaller but numerous deals across multiple regions.
Gold stayed center stage, but copper’s second-half surge suggests a rising appetite for critical minerals too.
If tensions persist and commodity prices stay elevated, watch for another lively M&A season, one where gold and copper continue their tug-of-war for the top spot.
And if certain metals once deemed “quiet” roar back, it could make 2025 a year of unexpected pivots.
In mining, after all, the biggest surprises often emerge when no one is looking.
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We’re now in uncharted territory with $3,000/oz gold. And I’m placing my bets.
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Regards,
Marin Katusa
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