Halftime Review: Quality & Torque in the Gold Sector

Research evidence excerpt

Halftime Review: Quality & Torque in the Gold Sector

Canada | Metals & Mining EquityJulyResearch13, 2026

Quality vs Torque MatrixHalftime Review: Quality & Torque in the Gold Higher

Defensive Compounder RGLD WPM High QualitySweet/ SpotHigh Torque

High Quality / Lower TorqueSector DPM OR TFPM AGI GMINAEM

FNV

LUG EDV NEM

KGC PAASLooking at 1H26 performance for gold stocks in our coverage, the royalty/ OGC

BTGstreaming subsector has clearly outperformed the GDX, along with higher Quality

Speculative Torquequality miners with low costs. This has been the trend in a commodity down Less Compelling

Quality / High Torque Lower Quality / Lower Torque Low

Gold Producertape, with gold -5% ytd and -25% from peak. The question becomes what Royalty & Streaming

Torque

investors will gravitate towards when gold prices rebound in 2H, which is our .Source:Lower Jefferies Higher

base case. We expect high quality companies + torque to outperform vs. pure

torque. January 2025 - January 2026: High torque names outperformed the GDX

What type of gold company outperformed in 1H? Gold prices are down 5% ytd and down 25%

from peak, while the GDX is down 12% ytd. We performed statistical analysis to determine which

type of gold company investors rewarded with a higher P/NAV valuation in 1H26. At a high level,

unsurprisingly the royalty/streaming subsector has outperformed the GDX ytd (Ex.4), since these

companies have lower operational leverage to declining gold prices. After this, it's a bit more .Source: Factset; Jefferies

mixed in our coverage based on idiosyncratic factors, but generally miners with low costs (i.e.,

higher quality) have relatively outperformed (Ex. 3). We tested other variables such as ROE, ROIC,

etc. but there was no meaningful relationship with valuation.