Key Concepts
- Unprecedented Bull Market: Precious and base metals are experiencing record-high prices, driven by economic and geopolitical factors.
- Shift in Investment Strategy: Major investors are increasing allocations to gold, recognizing its role as a portfolio diversifier and hedge against economic uncertainty.
- Underinvestment & Supply Shortages: Years of underinvestment in the mining industry have created supply shortages, particularly in critical metals like copper and silver.
- Royalty Model Success: The royalty model, exemplified by Franco-Nevada, offers a low-risk, high-return approach to mining investment.
- Strategic Importance of Domestic Supply Chains: Nations are prioritizing the development of secure and independent supply chains for critical minerals.
- Opportunity & Decisive Action: Seizing opportunities quickly and decisively is crucial for success in the mining industry.
The Current Metals Bull Market & Industry Shift (December 2025)
Recorded on December 23, 2025, the Northern Miner podcast segments detail an unprecedented bull market in precious and base metals. Gold is trading at $4,521/oz, silver at $6957/oz, platinum at $2,196/oz (up 5% on the day), palladium at $1,911/oz (up 4.4% on the day), copper at $5.43/lb, tin at $19.61/lb, lithium at $14.7/kg, and uranium above $80/lb. These prices represent significant gains, particularly for gold and silver, and a dramatic shift from the industry’s struggles in recent years (2015, 2019-2020). The Japanese 10-Year Bond Yield reached 2.03% on December 23, 2025, up 0.8% on the week, contributing to investor concerns.
This boom is driven by a confluence of factors. Economic necessity and national security concerns are now eclipsing ESG (Environmental, Social, and Governance) considerations. Major investors like Ray Dalio and Jeffrey Gundlach are advocating for allocations of 20-25% of portfolios to gold, a departure from traditional 60/40 bond/stock portfolios, driven by concerns about the bond market. Underinvestment in the mining sector, coupled with declining ore grades, is creating significant supply shortages, especially in copper and silver. Geopolitical tensions surrounding rare earths and cobalt, particularly in Myanmar and potential Indian involvement in rare earth supply chains, further exacerbate these concerns.
Strategic Responses & Infrastructure Development
Governments and companies are responding to these challenges by prioritizing the establishment of secure and independent supply chains for critical minerals. The US government is backing Korea Zinc’s proposed $7.4 billion smelter project to counter China’s dominance. The Liberty Corridor project in Guinea and Liberia aims to create an alternative iron ore supply chain to the US, independent of China. Indonesia’s proposed cuts to nickel ore production in 2026 (down to 96,000 tons annually from 280,000 tons) are anticipated to drive nickel prices higher. The closure of a major aluminum smelter in Mosambeeq, with a capacity of 560,000 metric tons per year, illustrates supply chain vulnerabilities and impacts European aluminum prices.
Franco-Nevada & the Power of the Royalty Model
Pierre Lassonde’s journey building Franco-Nevada exemplifies a successful investment strategy focused on the royalty model. The company’s foundation stemmed from the acquisition of a royalty on the Gold Strike mine in the Carlin Trend, Nevada. Lassonde recounted discovering the royalty advertisement and negotiating the purchase, initially offering $500,000, ultimately securing it for $2 million plus shares when the seller faced bankruptcy. His philosophy, “Carpedium sees the day,” emphasizes seizing opportunities immediately.
Franco-Nevada’s success is attributed to the “optionality” inherent in the royalty model – benefiting from mine development without bearing the capital costs. Gold Strike produced 50 million ounces, generating over $1 billion in revenue for Franco-Nevada. Lassonde highlighted that Franco-Nevada’s reserves were continually replenished by operators’ exploration efforts at no cost to the company. He also noted the Carlin Trend’s cost advantage in the early 1980s, with gold discovery costs at $7.50/oz compared to $32/oz in Canada.
Investment Philosophy & Gold’s Role in the Global Economy
Lassonde’s investment philosophy centers on identifying undervalued assets, understanding underlying economics, and taking calculated risks, encapsulated in his mantra, “Give me my money back.” He emphasizes the importance of due diligence, exemplified by his comparative study of gold discovery costs. He advocates for the royalty model as a superior business model due to its lower risk, higher returns, and reduced capital expenditure.
Lassonde also discussed his time as chair of the World Gold Council and his efforts to encourage central banks to include gold in their reserves. Research indicates a $50/oz impact on the gold price for every 100 tons purchased by central banks. He expressed concern over the loss of Canadian mining headquarters to foreign ownership and stressed the importance of strong relationships with First Nations communities, citing a recent deal in the Yukon as an example. He noted that approximately half of global gold production is purchased by central banks.
Technical Considerations & Project Economics
Key technical terms discussed include NPV5 (Net Present Value at 5% Discount Rate), IRR (Internal Rate of Return), royalty, Carlin Trend, resource vs. reserve, and optionality. The Mount Todd project in Australia, with 10.6 million ounces of gold, demonstrates the impact of gold price fluctuations on project economics. At $2,500/oz gold, the after-tax NPV5 is $1.1 billion with a 27.8% IRR. At $3,300/oz gold, the after-tax NPV5 increases to $2.2 billion with a 45% IRR. Lithium prices increased by $57/kg on the week.
Conclusion
The Northern Miner podcast segments paint a picture of a rapidly evolving mining landscape. The current bull market in metals, driven by economic and geopolitical forces, is reshaping investment strategies and prompting a renewed focus on securing domestic supply chains. The royalty model, as demonstrated by Franco-Nevada’s success, offers a compelling alternative to traditional mining investment. The importance of decisive action, thorough due diligence, and strategic partnerships – particularly with Indigenous communities – are critical for navigating this dynamic environment. Ultimately, the segments underscore the enduring strategic importance of metals in the modern world and the cyclical nature of commodity markets.
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