Adrian Day: Sentiment ‘Unbelievably Lopsided’ for Gold, Still ‘Very Undervalued’, Silver and Oil

Stijn Schmitz welcomes Adrian Day to the show. Adrian Day is CEO of Adrian Day Asset Management & Manager of EuroPacific Gold Fund. Adrian Day observes a significant opportunity in the resource sector, noting that gold and silver equities are trading at valuations near all-time lows, compounded by deeply negative sentiment. He points out that bullish sentiment for gold has plummeted to single digits, even hitting zero percent on one occasion, creating what he views as an exceptionally lopsided and contrarian setup. While acknowledging that gold bullion cannot be valued using traditional discounted cash flow models, he argues it is undervalued on an inflation-adjusted basis and relative to global debt and money supply, suggesting the current cycle has a long way to run before any potential overshoot. Day emphasizes that key indicators for market tops are primarily sentiment-driven, such as overwhelming bullish media coverage, unsolicited stock tips from the public, and lines forming outside bullion dealers. Harder data points include accelerating flows into gold ETFs and the emergence of premiums on physical products. For investors new to or underweight the sector, he recommends buying across the spectrum, highlighting that even the largest, most conservative royalty and streaming companies are trading at historically low multiples. When evaluating junior exploration companies, his focus is overwhelmingly on the quality of the management team and the strength of the balance sheet, with the specific mineral property being the least important factor. He stresses the importance of management with a relevant track record and the presence of large, supportive, long-term shareholders who can ensure access to capital during difficult markets. For mid-tier producers, he prefers companies with diversified assets in concentrated jurisdictions to mitigate single-mine risk. Briefly touching on other commodities, Day notes that oil and gas stocks have dramatically underperformed the broad market this year and have not retreated significantly from recent highs, though he is waiting for lower entry prices. He also sees potential in thermal coal projects serving Asian markets, where energy security has become a paramount concern.