Frank Talk: The gold mining rally nobody saw coming

Gold has been grabbing headlines with a powerful rally, but Frank Holmes, CEO of U.S. Global Investors (NASDAQ:GROW), argues the bigger story may be unfolding beneath the surface. Gold miners have dramatically outpaced the metal itself, posting one of their strongest weekly gains in decades. Holmes says the move comes despite traditionally unfavorable conditions for gold, including elevated real interest rates, while investor positioning remains surprisingly restrained. At the same time, miners are generating significantly more cash flow, expanding margins and taking a more disciplined approach to capital allocation. In this op-ed, Holmes explains why he believes the gold mining sector may only now be waking up. Gold jumped more than 7% in the week ending August 7, one of best weeks since 1990. That’s the news many of you read. What didn’t make the headlines is what happened to the companies that pull the metal out of the ground. The NYSE Arca Gold Miners Index rose over 20% in the same week. In the 22 years since that index launched, only one week has been better: December 12, 2008, when the financial system was falling apart. As someone who’s been in the business for 40 years, I can tell you a move like that usually means one of two things. Either something is badly broken, or the market has been asleep on something and just woke up. In this case, I believe it’s the second one. Gold is defying its biggest headwind Why do I say that? Historically, gold has struggled when real interest rates rise, because the metal...