Gold Market Update from OCM

After an unprecedented 14 positive months in a row in the gold price, March has proven to be a correction month in both gold and gold shares. Hot trading money is flushing out of the gold market while the case for owning gold and gold assets continues to push forward. Trump has failed to wrestle control of the growth in Federal debt. Trump kicked Elon Musk and his DOGE campaign to the curb when Trump realized cutting government spending would torpedo the U.S. economy. Interestingly, the upward move in the gold price started at that point. With the U.S. dollar increasingly under pressure from China and other forces, the use of military action in Iran and escalating geopolitical tensions does not surprise us. It feels like end of empire action and a last-ditch effort to save the place of the U.S. dollar, in our opinion.

Momentum investing creates wild swings in markets that can easily throw investors off course. In today’s world of zero brokerage commissions, the action has become even more extreme. The pullback in gold prices from a peak of $5,500/oz to $4,400/oz is a 20% correction, not uncommon in bull market action. Share prices of gold mining shares have pulled back roughly 20% to 40%. Operating margins for the producers remain historically elevated. In our opinion, the price correction is overdue but does nothing to throw us off course of our main thesis – the escalating U.S. debt position has backed the Federal Reserve into a corner leading to accelerating U.S. dollar depreciation versus gold. In fact, for investors who can tune out the noise it creates opportunity.

One thing we will be looking for in the coming months is whether new Federal Reserve Chairman nominee Kevin Warsh will be tested by the market, much like Alan Greenspan was tested by the market crash in 1987. If an unwinding of the market were to take place, we would expect the response to be extreme monetary accommodation by the Fed, putting further downward pressure on the value of the U.S. dollar versus gold and possibly leading to a new monetary system. Interestingly, monetary systems historically have 50-year life cycles. President Nixon closed the gold window in 1971, thus it has been 55 years since the world has had a new monetary system. So, one might say we are due.

CBO U.S. Debt Projections

Apollo Global Management’s research team put out a fantastic chart deck that looks at the treasury market and the U.S. debt situation, including the chart above.

The CBO (Congressional Budget Office) projects debt to grow to over 150% of GDP in the relatively near future. At OCM, we’ve conducted our own study into CBO estimates. The CBO provides 10-year projections on Gross federal debt. We collected the CBO’s projections going back to 2006 (1996’s 10-year forecast) and compared their projections to the actual gross federal figure. On average the U.S. gross federal debt was 54.77% percent higher than the 10-year projection. Over that same time period (2006-2025), the average yearly gold price has an 86.70% correlation to gross federal debt. Thus, if the U.S. continues the CBO projection, we are in for an even higher debt environment than Congress’s budget office can imagine and gold may continue to rise over the long haul.

Here are a few more charts that we found interesting, I encourage readers to download and view the entire chartbook:

Quarterly Earnings

Most major gold producers have reported their Q4 2025 earnings. A few overarching observations.

• The Q425 average gold price was $4,142.73. In the OCM portfolio as of 3/24, we have 22 gold producers of various sizes, with production ranging from 50,000 ounces per year to multiple million ounces of annual production. Of the 22 producers, their average realized gold price for Q4 25 was $4,102.64. Considering the sequencing of sales and some producers do have hedges, or pre-paid agreements, this is impressive for the entire cohort to be close to the average gold price that had continuously been ticking up throughout the quarter. Another reason I bring this up is that as of 3/24/26, the average gold price of Q1 2026 is $4,896.91, or $754.18 higher than last quarter. Margins for gold miners continue to increase. It is important to note that some miners may see their all-in sustaining costs (AISC) increase as the gold price increases. That is because of royalties on their projects, which are tied to the increase in the gold price.

• While it is important to keep track of mining companies costs and not let unnecessary expenditures fall through the cracks, it’s important to be aware of the royalty component of increased AISCs. It is possible that we see increased AISCs for Q1 26 due to the Iran war. However, diesel and oil typically account for roughly 10% – 15% of the cost to produce each ounce. Creative companies will be able to account for the issues spawned by the Iranian War and potentially offset some oil costs through other cost saving endeavors. The companies who operate open pit mines will feel the increase in oil the most, as they are trucking the most ore with their 350 ton haul vehicles. Also, as the magnifying glass of the world has come closer to mining companies and their impact on the environment, many companies have looked to alternative sources of power such as hydro and/or solar to help offset some of their reliance on fossil fuels.

• Companies are continuing to balance growth with shareholder returns. When compared to the last precious metal bull cycle in the 2000s and early 2010s, major companies are showing their commitment to shareholders vs. reckless M&A.
o For example, the annual dividend yield of AngloGold Ashanti in 2011 was roughly 1.5%. The current TTM (trailing twelve month) yield is 4.15%
o For Barrick, the 2011 yield was 1.2%. Today the TTM is 2.37%.
o Agnico Eagle still has a relatively small dividend compared to peers but the company has also committed to share buybacks while also being a leader in performance.

• Of course, gold asset investors do not purchase gold equities purely for the dividend yield. We want to see growth with exposure to the gold price. However, it is encouraging to see the balance sheet strength of these companies, providing them optionality for asset growth while also sharing their profits with shareholders.

Portfolio Update

As of 3/24/26, the OCM portfolio remains well balanced among all types of mining and royalty companies. A few key updates since the beginning of Q126:

● Of note, a roughly 2.5% position in the Fund has moved from the exploration/development classification to junior explorer. Rio2 celebrated the first pour of their Fenix gold project in Chile, which is expected to produce over 100,000 ounces per year once the project gets fully operational. Rio2 also acquired Condestable, a long-standing copper producing project in Peru. With both of these projects generating cash, there is a pathway for the company to commit to a Fenix gold expansion, which the company has said would produce 300,000 ounces of gold per year.

● Montage Gold, a developer in Africa, is roughly 2.8% position in the fund. Montage moved forward their expected first quarter of production from 2027 to Q4 of 2026. Their core project is Kone, which is expected to produce 300,000 ounces per year in Cote D’Ivoire. Behind a management team that was formerly at Endeavour Mining and backed by the Lundin Group, we are excited to move this from developer to producer by the end of the year. Montage has been active in the region with multiple development assets and stakes in exploration companies, as they aggressively look to become a major player on the continent.