You might’ve read Matt Smith’s Tuesday piece—the one using salaries from the Panama Canal era to show just how much our real earnings have collapsed. It’s a powerful reminder of how broken our money—and our sense of value—has become.
That essay got me thinking precisely about that… value. What actually makes something worth something?
If you said “the market,” you’re not wrong. But can markets be wrong?
In a world free of government interference and central bank shenanigans, I’d probably say no. But that’s not the world we live in. And the truth is: markets misprice things all the time. If they didn’t, there’d be no such thing as a speculator. Doug Casey probably wouldn’t exist.
Short-term mispricings, especially, are particularly common. Hence the famous line from John Maynard Keynes, father of modern monetary mischief:
Markets can remain irrational longer than you can remain solvent.
The good news is, over time, markets tend to correct. Value usually finds its level. Hopefully you’re still solvent—and positioned well—when it does.
In today’s piece, I’ve got two examples of markets behaving irrationally. One is wildly overvalued. The other is still dirt cheap. But in both cases, I believe prices will eventually come back to earth—or take off, as the case may be.
Let’s start with the overvalued one…
A De Facto Bitcoin ETF—At Twice the Price
You’ve probably heard of MicroStrategy—recently rebranded as Strategy (MSTR).
Led by outspoken Bitcoin (BTC) advocate Michael Saylor, the company has become one of the most aggressive corporate buyers of Bitcoin in history. In fact, they started accumulating BTC back in 2020—long before most institutions took it seriously. And years before the first U.S. spot Bitcoin ETF ever got approved, MicroStrategy was already being treated by many retail investors as a kind of de facto Bitcoin ETF.
Today, Strategy holds around 555,450 Bitcoin—worth roughly $54 billion. That’s essentially its only major asset.
And yet, the company’s market cap is $107.3 billion—nearly double the value of its Bitcoin holdings.
Now, that premium is almost entirely speculative. The thinking goes: if Bitcoin keeps rising, Strategy’s stock should outperform because of the added leverage that comes with being a publicly traded vehicle. Investor momentum, equity market enthusiasm, and Michael Saylor’s relentless promotion all feed into the story.
On top of that, the company constantly borrows money and issues shares to buy even more Bitcoin—creating a kind of reflexive loop.
But double the value of its actual holdings? Give me a break.
The Golden Value Gap
So what’s the opposite of the Strategy situation?
That would be gold stocks.
Now, you might be thinking—hasn’t gold been hitting a new all-time high almost every month lately?
It has. And here at Crisis Investing, we believe that trend still has a long way to run. That’s actually one of the core ideas behind Matt’s recent report, Trump’s Reset. If you haven’t read it yet, I highly recommend you do. It makes a strong case that gold’s recent breakout isn’t just about inflation or market jitters—it’s tied to a much bigger monetary shift already in motion under Trump’s team.
At the same time, I know that it’s not easy to buy something when it’s trading near all-time highs.
Fair enough.
But remember, while Doug Casey always recommends holding physical gold as part of a long-term portfolio, he also sees gold stocks as a way to amplify returns.
With that in mind, let’s take a look at this next chart…
What you’ll notice is that the HUI Index—which tracks a basket of senior gold miners—has delivered roughly the same return as gold itself over the past year: about 48%. That might not sound strange at first glance… but it’s actually highly unusual. Historically, gold stocks tend to outperform the metal in a rising market because of their built-in leverage to gold prices (more on that in a moment).
What’s more, the HUI index is still sitting at 405—about 36% below its record high from September 2011. Take a look.
That’s a massive lag. Especially when you consider that gold itself is up over 80% since then.
In short, there’s a major disconnect between the miners and the metal. I call it the “golden value gap.” And here’s why it makes even less sense than the Strategy example we looked at earlier.
Why Miners Absolutely Should Be Beating Bullion
Let’s not forget—we’re not talking about junior explorers here. The HUI index tracks big-name gold companies like Newmont (NEM), Barrick (GOLD), and Franco-Nevada (FNV). These are the majors.
Normally, when gold rises, these companies rise even more. That’s because their costs don’t change much, but the price they sell gold for does—so profits rise faster than the metal itself. That’s what we mean by leverage.
Now, I know we're all intuitively familiar with the concept of leverage, but here's a quick example to show you how powerful it can be in mining stocks.
Imagine gold climbs from $2,000 to $3,000 per ounce (which is more or less what’s happened over the past year, not counting the most recent gains). If you own bullion, that’s a solid 50% return.
Now let’s say it costs a mining company $1,350 per ounce to produce gold. At $2,000, they’re making $650 per ounce. But at $3,000, that margin jumps to $1,650—a 2.5x increase in profitability.
That kind of earnings expansion can supercharge stock prices. Because when margins double or triple, and production volumes stay steady, free cash flow explodes. Stocks of well-run producers can easily climb 100%, 150%, or more—far outpacing the metal.
But they aren’t… not yet, at least. The fact that major gold producers, as a group, are only up about 48% over the past year—the same as gold—is a clear sign of opportunity.
The best part is, you don’t need to go with risky explorers or developers to aim for that kind of upside. Just go with a high-margin, reliable gold producer.
But keep in mind, the “golden value gap” won’t stay open forever.
Regards,
Lau Vegys
P.S. Because we’re incredibly bullish on gold—not just this year, but for the long haul—a portion of our Crisis Investing portfolio is focused on these stocks. Doug owns most of them himself. And in a recent issue, we featured a new gold stock that perfectly fits the profile I described above: a high-margin, reliable gold producer. No hedging. No messy jurisdictions. No bloated cost structure. It’s one of the best-run senior producers in the business—and we see it as a core holding in this gold bull cycle.