We believe now is a good time for investors to consider selling their S&P 500 Index funds and to buy gold mining stocks. Since February 28, when Israel and the United States began a series of missile strikes against Iran, front-month West Texas Intermediate crude oil futures have risen 46.7%. On Thursday, CNBC ran the headline: “Gold and silver sell-off accelerates as inflation fears grip global markets.” It reads like an oxymoron. Normally, we would expect new inflation fears, even from an oil shock, to be a bullish catalyst for gold and mining equities. It can also be a trigger for a selloff in an overvalued large cap US equity market. That was the case on both counts from the start of the 1973 Yom Kippur War and ensuing Arab Oil Embargo, as we show in the chart below.
Rising Interest Rates Send a Potentially False Signal for Gold
Normally, rising inflation expectations would be looked at as a glass half full for steadfast gold bulls. But it seems that gold bears and perhaps weak-handed gold investors today are seeing rising interest rate expectations as a reason to look at the gold market as a glass half empty. The overwhelming narrative today is that rising interest rates are bad for gold, but we think this is a false narrative. Indeed, with the oil spike fueling new inflationary concerns in the US, the Fed rate cuts that had been priced into the futures curve for the remainder of 2026 now appear off the table. The entire US Treasury yield curve has shifted higher over the last three weeks. The 2-year yield has risen the most, up a full 50 basis points, reversing the recent inversion at the short end of the curve.
Precious Metals Outpaced Rising Oil in the 1970s, Even as Interest Rates Rose
We need to look at the most comparable time in history, which in our opinion is the 1970’s decade, to see if rising interest rates are truly bad for gold or not. We think the current geopolitical climate is extremely bullish for precious metals prices, just as it was at the outset of that period. Remember, that was a stretch that included two major oil price shocks in the Middle East: the 1973 Yom Kippur War, and then later the 1979 Iranian Revolution. Inflation expectations, interest rates, and oil prices all rose substantially throughout the entire decade. Rising interest rates over this time were not a valid reason to be bearish on gold.
Gold rose 2,329% from US$35/oz. at the beginning of the decade to a high of US$850/oz on January 21, 1980. Silver rose even more than gold over the same time period, up 2,888% from US$1.64 to US$49.00. Oil rose substantially too, but even less than gold and silver. Arab Light Crude Oil climbed 1,553% from US$1.80/barrel to US$27.96/barrel over that time period. If gold and silver investors had feared rising interest rates from the outset, it would have caused them to miss this historic runup in the entire precious metals complex. US Fed Funds interest rate rose from 3% to over 14.1% over the entire period, reaching a high of 17.6% on 10/22/1979, three months before gold would finally top.
Rising interest rates in the 1970s did nothing to stop the trend of secular rising inflation expectations until Fed Chair Paul Volcker would later raise the Fed Funds rate all the way to 22.4% on 7/22/1981, creating a double-dip recession that finally broke both inflation and gold’s back. In our opinion, today’s meager 3.6% Fed Funds rate and 4.4% 10-year US Treasury yield are well poised to ignite a new inflationary era, not to quash one, even if the Fed were to allow rates to rise.
Gold Mining Stocks Crushed the S&P 500 Index in the 1970s
Gold mining equities also did extremely well over the 1970s decade, especially compared to the S&P 500 Index. The Barron’s Gold Mining Index rose 1,247% from its low on 12/26/1969 to its high on October 17, 1980. The S&P 500 was up a mere 43% in comparison. We prefer mining stocks relative to owning outright gold and silver today, because in our valuation models, the equities are ultra-cheap relative to the metal prices, especially in our highly curated activist metals portfolio. Our portfolio is heavily tilted toward the exploration companies that control some of the world’s most attractive new gold, silver, and copper discoveries. These are the types of companies that the major miners will need to buy at a significant premium to current market prices to replace their dwindling reserves after a declining trend of exploration spending and capital investment over the last 14 years.
We think today’s gold mining investors would be wise not to panic at today’s low levels of interest rates and inflation expectations, especially given the historic US debt and deficit imbalances, which in our view portend at least as high and sustained inflation rates in the decade still ahead as in the 1970s. On the fiscal deficit front, the war has already cost more than a billion dollars a day, with the first 100 hours alone costing $3.7 billion. Speaking of oxymorons, the Pentagon sent a request to the White House for more than $200 billion in supplemental war funding on March 18, and gold and silver sold off hard the next day. Earlier in the week, the US national debt quietly crossed $39 trillion, less than 5 months after hitting $38 trillion. With the current war in Iran, the thesis for precious and critical metals mining stocks has not broken; it has only gotten stronger.
The 200 Day Moving Average: Technical Support for Gold Stocks; Resistance for the S&P 500
The large cap S&P 500 and Nasdaq 100 indices finally appear to be just starting to break down from record valuations, as we would expect with the new geopolitical conflict and resulting likely inflation and higher interest rates, but gold, silver, and mining stocks have sold off significantly more than these indices since Israel and the US first struck Iran on February 28. We think that presents an incredible short-term buying opportunity for the undervalued and still uncrowded mining stocks, especially the premier small cap explorers that we favor in our portfolios. Meanwhile, we see the long-slowing momentum, and now breakdown from the 200-day moving as a potential sell trigger for late-cycle, overcrowded, and overvalued US large cap equity indices and megacap tech stocks.
Interestingly, both mining stocks and the large cap indices are near their critical 200-day moving average support and resistance levels, but the two groups have highly divergent valuation and growth profiles. The indices of the high-growth, undervalued mining stocks are deeply oversold and hover at or above their 200-day moving average. The S&P/TSX Venture Composite Index, a proxy for small cap exploration focused miners, has already come down 23% from its January 23 recent high and could find strong support. It is now right on the 200-day moving average. It is further curious that the small cap exploration focused miners where Crescat is tilted are outperforming the larger cap producing miners in the current pullback. From February 27 through March 20, the large cap VanEck Gold Miners ETF (GDX) has declined 31%, while the VanEck Junior Gold Miners ETF (GDXJ), a mid-tier producer index, is down 33%. Both of these ETFs hover just above the 200-day moving average now.
The S&P 500 and Nasdaq 100, however, look like they have just critically broken the 200-day moving averages. Yet, the S&P 500 is down only 6.8% from its recent January 28 high. In our view, it has substantially further downside ahead to get to reasonable valuations based on market history. The broad US large cap indices could be finally poised to break down hard from historically high fundamental valuations comparable to those at market tops in 1929 and 2000.
On a technical basis, both the GDX and GDXJ ETFs have 14-day Relative Strength Index (“RSI”) readings below 30, a level typically associated with oversold conditions suggestive of a potential for a near-term rebound. Note last two times GDXJ 14-day RSI was sub 30 in March 2023 & October 23, there was a 34.6% and a 27.9% rally, respectively, within just two months. For an industry that just led the entire stock market in 2025, such a sharp rebound would not surprise us at all.
Although pullbacks can be painful and unsettling in the moment, they often create some of the most attractive opportunities for disciplined investors. When it comes to mining stocks today, these aphorisms apply:
“Buy when there’s blood in the streets, even if the blood is your own.” – Baron Rothschild
“The time of maximum pessimism is the best time to buy.” – Sir John Templeton
“Be fearful when others are greedy and greedy only when others are fearful.” – Warren Buffett
Oil Price Future Less Clear than Gold
Importantly, mining equities have come under pressure not only from the decline in underlying precious metals prices, but also from growing concerns around operating-cost inflation, particularly the risk that a sustained rise in oil prices could compress margins across the sector, especially among the producers who have been enjoying strong margins.
While we have shown that higher oil prices do not mean that metal prices cannot go even higher. At this stage, however, the ultimate effect of recent geopolitical developments on the long-term path of oil prices remains unclear. The US is the largest oil-producing country in the world today and is now a net exporter, unlike in the 1970s when it was dependent on Middle East oil. Although the market has understandably responded to the risk of higher energy costs, it is too early to conclude whether the current move in crude reflects a lasting shift in fundamentals or a shorter-term geopolitical premium. To provide perspective, the table below illustrates the inflation-adjusted percentage change in crude oil prices following the onset of past major Middle East conflicts over various time horizons.
Still Early Innings in a New Secular Bull Market for Mining Stocks
We launched our precious metals fund in 2020 and began allocating heavily to exploration mining companies at that time because we believed the sector was entering the early innings of a major multi-year bull cycle. That view was, and continues to be, driven by our conviction that the industry faces deep structural supply shortages. At the same time, a macro backdrop characterized by inflationary pressures and unsustainable sovereign debt burdens has set the stage for a gold super cycle. More than a decade of underinvestment in mining has created a favorable supply and demand imbalance for metal prices at a time when the world needs more metals than ever. This argues for strong growth ahead for the mining industry revenues, earnings, and new investment dollars poised to pour into the industry for exploration and new mine development. Meanwhile, investors’ love affair with big technology stocks and apprehension toward mining still leaves this crucial industry with valuations that are ultra depressed. That is a combination for likely much higher precious and critical metals mining stock prices in the years ahead.
Crescat Performance and Call to Action
For our existing investors, we want to first thank you for your continued trust and support. In January of this year, we heard from a number of you who wished you had added at the end of 2024. This pullback is that moment again. The same macro environment that rewarded your conviction in 2025 has not reversed, it has deepened. We believe this is the time to consider an additional allocation. And for those who are comfortable where they are, staying put with a thesis this intact is equally the right call.
For those who stayed on the sidelines feeling that 2025 was too strong a year to come in after, this is your opportunity to get positioned. The 2025 performance was significant, but the case for precious metals and mining equities was never a one-year story. The pullback has reset prices without resetting the thesis. We believe this is a cleaner setup than most investors get and an opportunity to be positioned ahead of the next leg. April 1 is the date to get positioned.
Sources: HFR, Inc., NASDAQ, and Crescat Capital LLC. Past performance does not guarantee future results; Investing involves risk, including risk of loss. See additional important disclosures below.
Sincerely,
Kevin C. Smith, CFA
Founder & CEO
Nathaniel Gilbert
Analyst
For more information, including how to invest, please contact:
Marek Iwahashi
Head of Investor Relations
(720) 323-2995
Linda Carleu Smith, CPA
Co-Founder & Chief Operating Officer
(303) 228-7371
© 2026 Crescat Capital LLC
Important Disclosures
Discussion and details provided are for informational purposes only. This letter is not intended to be, nor should it be construed as, an offer to sell or a solicitation of an offer to buy any security, services of Crescat, or its Funds. The information provided in this letter is not intended as investment advice or recommendation to buy or sell any type of investment, or as an opinion on, or a suggestion of, the merits of any particular investment strategy. This letter may contain certain forward-looking statements, opinions and projections that are based on the assumptions and judgments of Crescat with respect to, among other things, future economic, competitive and market conditions and future business decisions, all of which are difficult or impossible to predict accurately and many of which are beyond the control of Crescat. Because of the significant uncertainties inherent in these assumptions and judgments, you should not place undue reliance on these forward looking statements, nor should you regard the inclusion of these statements as a representation by Crescat that these objectives will be achieved.
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Performance
Performance data represents past performance, and past performance does not guarantee future results. Performance data, including Estimated Performance, is subject to revision following each monthly reconciliation and/or annual audit. Individual performance may be lower or higher than the performance data presented. The currency used to express performance is U.S. dollars. Before January 1, 2003, the results reflect accounts managed at a predecessor firm. Crescat was not responsible for the management of the assets during the period reflected in those predecessor performance results. We have determined the management of these accounts was sufficiently similar and provides relevant performance information.
1 – Net returns reflect the performance of an investor who invested from inception and is eligible to participate in new issues and side pocket investments. Net returns reflect the reinvestment of dividends and earnings and the deduction of all expenses and fees (including the highest management fee and incentive allocation charged, where applicable). An actual client’s results may vary due to the timing of capital transactions, high watermarks, and performance.
2 – Performance figures presented Excluding SCM SP represent the fund’s net returns calculated without the impact of the San Cristobal Mining, Inc. side pocket that was designated on July 1st, 2024. The side pocket includes a private equity asset that is not available to new investors in the funds on or after July 1, 2024. Excluding these assets provides a clearer view of the performance to investors coming into the funds after that date. New investors cannot participate in the SCM Side Pocket and will not share in its potential gains or losses. Investors should consider both the overall performance and the performance excluding the side pocket when evaluating the fund’s returns.
Benchmarks
The HFRX Global Hedge Fund Index is designed to be representative of the overall composition of the hedge fund universe. It is comprised of all eligible hedge fund strategies, including but not limited to convertible arbitrage, distressed securities, equity hedge, equity market neutral, event driven, macro, merger arbitrage, and relative value arbitrage. The strategies are asset weighted based on the distribution of assets in the hedge fund industry.
The HFRX Equity Hedge Index measures the performance of the hedge fund market. Equity hedge strategies maintain positions both long and short in primarily equity and equity derivative securities. A wide variety of investment processes can be employed to arrive at an investment decision, including both quantitative and fundamental techniques; strategies can be broadly diversified or narrowly focused on specific sectors and can range broadly in terms of levels of net exposure, leverage employed, holding period, concentrations of market capitalizations and valuation ranges of typical portfolios.
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The PHLX Gold/Silver Sector Index (XAU) is a capitalization-weighted index composed of companies involved in the gold or silver mining industry.
The S&P 500® is widely regarded as the best single gauge of large-cap U.S. equities. The index includes 500 leading companies and covers approximately 80% of available market capitalization.
Returns for any index include the reinvestment of income and do not include transaction fees, management fees or any other costs. The performance and volatility of the funds will be different than those of the indexes. One cannot invest directly in an index. Benchmarks are unmanaged and provided to represent the investment environment in existence during the time periods shown.
Hedge Fund disclosures: Only accredited investors and qualified clients will be admitted as limited partners to a CPM hedge fund. For natural persons, investors must meet SEC requirements including minimum annual income or net worth thresholds. CPM’s hedge funds are being offered in reliance on an exemption from the registration requirements of the Securities Act of 1933 and are not required to comply with specific disclosure requirements that apply to registration under the Securities Act. The SEC has not passed upon the merits of or given its approval to CPM’s hedge funds, the terms of the offering, or the accuracy or completeness of any offering materials. A registration statement has not been filed for any CPM hedge fund with the SEC. Limited partner interests in the CPM hedge funds are subject to legal restrictions on transfer and resale. Investors should not assume they will be able to resell their securities. Investing in securities involves risk. Investors should be able to bear the loss of their investment. Investments in CPM’s hedge funds are not subject to the protections of the Investment Company Act of 1940.
Those who are considering an investment in the Funds should carefully review the relevant Fund’s offering memorandum and the information concerning CPM. For additional disclosures including important risk disclosures and Crescat’s ADV please see our website: https://www.crescat.net/due-diligence/disclosures/