Demystifying Life

Playing the third quarter: the gold bull market

My thoughts on macro, my current portfolio and why I've positioned the way I have

Gavin McCracken

Jan 12, 2026

I’m putting this under my substack since many paying subscribers like my thoughts and speculations on macro and individual companies, but writeups on economics or stocks will be for paid subs. As everyone knows, I’m a Ph.D. student in AI and not a financial advisor—to me, the markets are simply a game to compete in.

I started a draft of this a few days ago, and this weekend was so wild from multiple Western governments that I have had to add entirely new sections. Things are going fast—too fast.

As my X followers know, my opinion on commodity cycles is that at the start of a cycle, you want to own the short life of mine (LOM) plays. My choice was Andean precious metals, and it ended up being the second best mining stock performer of 2025, behind Santacruz which was #1.

My opinion on how to play mid cycle to late cycle, will be the underlying theme of this article. Short LOM mines are not really the optimal play anymore. For mid cycle and onwards, you ideally want to own near-term new producers with medium LOM. Anything with a very long LOM already is trading with a hefty premium. Medium LOM assets are however, often still being overlooked at this point in the cycle.

The major tailwinds supporting the 2025 precious metals rally were the following.

1. Weaponization of the USD ( this started it all). The USA’s response to Russia’s invasion of Ukraine was many sanctions, including freezing >600billion in Russian assets that were held overseas.
   1. Sent a signal to foreign states that holding USD and US treasuries wasn’t a good idea
2. M2 supply growth. A huge boost to M2 from irresponsible spending and policy during the COVID pandemic.
   1. This was the primary driver of inflation over this time period.
3. Inflationary pressures from bad policies. Terrible ideas in basically every Western government resulted in spikes in the cost of almost everything.
   1. Retail investors started investing in gold and silver to hedge against inflation.
4. Rate cuts and the return of quantitative easing. The US Federal reserve is looking to provide liquidity dessert, to keep SPY, QQQ, and VOO going upward.

The point: the US is running structurally massive deficits, and there’s no sign of monetary policy (in the West in general, not just the USA) ceasing to be “spend as much as possible, it’s not our money anyway!”. Resultantly, we have massive sovereign buying (and Tether gold buying) of gold.

Idea 1: Minera Alamos MAI.V (Last trade 5.15 CAD) MAIFF (USD) MAIFD (temporary USD ticker)

Conservative estimate, value the three Mexican assets at 0.

Using $4200 gold (current gold spot is close to $4500), an NPV8 calculation for just their USA assets gives a 1.7billion USD fair value today. This contrasts to a fully diluted market cap of around 460mil USD.

Copperstone is supposed to come online late this year (Q4).

The pan mine is already producing, and they’re guiding for 40k oz for 2026. There’s ample exploration upside here, and they “should” be able to squeeze out 20k oz/yr production from this end of life mine for many years after ore from gold rock is trucked to Pan.

Gold rock, which will be funded easily without dilution from warrants being executed above the current share price ($7.00/share), and FCF from Pan + Copperstone has the NPV8 below.

Overall, this gives us 1.7bil USD.

The primary thing I hear from people about why they dislike Minera, is the large number of warrants hanging at $7.00 CAD. I’ve talked in spaces about this, but I don’t see warrants above the share price I pay as bearish. They prevent future dilution, and effectively act as “forcing me to take some tax free profits”, since I get diluted, but the company bank balance increases accordingly. The way I see it, as long as I buy below $7.00 CAD, this is good and lowers the probability of future dilutions.

Most importantly, and the thing everyone seems to miss about why I like Minera: it offers substantial downside protection. If the gold bull market reverses to $3300-$3500 gold/oz, this is still an alright pick. To contrast, almost every other gold junior would have its share price (and net present value) decimated by such a pull back, because they’ve rallied in tandem with the gold rally. My opinion is, with the risk of the gold upcycle coming to an end increasing (the longer we continue to move higher, the later the cycle gets) it’s time to look for opportunities that have pleasant worst case scenarios. For me, MAI fits the bill and is a core holding in all my accounts, particularly my tax protected accounts.

Notes: if they receive their long-awaited permit to mine in Mexico, the shares will immediately re-rate substantially. This means the Mexico portfolio is effectively a free call option you’re paying a $0 premium to add the option to your portfolio.

The point is there’s lots of opportunity for this to evolve into a 5-10x by mid 2028 (2.5 years), and there’s downside protection in the event gold reverses (which I believe unlikely, but you never know).

Next up are my predictions for gold macro in 2026, and a few picks that demonstrate how I think at this stage in a cycle. To be clear, I believe we’re in the peak uncertainty part of the cycle: it could end any day now, or it could rage on for 2-4 more years and become a historical structural supercycle. The main point is, I don’t want to have my portfolio decimated by betting too hard on positive gold beta. This means assuming gold prices go up (or silver prices go up) is absolutely not enough of a reason for me to own a gold miner at this point in time.

Most importantly, my favourite pick for 2026, which I suspect will 4-5x this year, with a gold mine coming on within the next few weeks is detailed at length.