Extraordinary levels of free cash in gold stocks

With near record A$ gold prices, the gold industry continues to generate extraordinary levels of free cash. Arguably it is allocating capital better than ever before in terms of balancing growth aspirations with shareholder returns. It’s great to see them really having a go with the drill bit too. We still think it is risky not to be exposed to the thematic. Elsewhere in the sector, the lithium story is real. As we saw with iron ore, the window for new entrants will close at some point, but we’re not there yet. Physical markets for commodities overall are still relatively well supplied, and Chinese policy and politics creates both risk and opportunity. Overall, we see the risk/reward of owning resources has shifted to be more favourable, but we expect continued volatility.