Myrmikan founder: Gold mining stocks remain undervalued, gold price expected to rise to $12,000 in the long term

```

Daniel Oliver, founder of the hedge fund Myrmikan Capital which focuses on micro gold and silver mining companies, believes that the gold market is at the early stage of a massive bull trend, and that the long-term gold price could rise to $12,000. He points out that mining stocks remain undervalued even after strong rallies, and that gold ownership among professional investors and domestic institutions is still extremely low.

In a recent client report, Oliver stated that the Federal Reserve will fall into a money printing trap, unable to both cut rates and shrink its balance sheet at the same time. He expects that Kevin Warsh, Trump’s nominee for the next Fed Chair, will be forced to turn to quantitative easing, even though Warsh has previously criticized the Fed for holding bonds.

This viewpoint was expressed at a time when gold prices hovered near the $5,000 mark on Tuesday. On Monday, gold prices repeatedly broke above, lost, and broke again above this level, with the rally largely reflecting shaken confidence in the dollar and U.S. assets.

Oliver’s analysis focuses on the fragility of the U.S. debt structure and its long-term impact on gold prices. He believes that private equity is at the center of the impending dollar collapse, which will push up financing costs and drive out foreign capital.

The Fed Faces Dilemma in Monetary Policy

Oliver points out that after the 2008 financial crisis, under Bernanke's leadership, the Fed began large-scale bond purchases to push up bond prices, lower interest rates, and inject massive reserves into the banking system. Afterward, the Fed started paying interest on bank reserves in order to maintain the lower bound of rates.

Currently, the rate the Fed pays is far above the yield of the bonds it holds. According to Oliver, since 2022, the Fed has accumulated operational losses of $245 billion. “The whole mechanism requires accelerated money printing and deeper central bank losses—yet the central bank is issuing the national currency,” he said.

Warsh will face $10 trillion in Treasury debt maturing in the next twelve months, and the government will be forced to roll over this debt. Oliver expects that although Warsh has voiced dissatisfaction with the bonds on the Fed’s balance sheet, he will ultimately have to turn to quantitative easing.

Three Stages of the Gold Bull Market

Oliver divides the gold bull market into three stages. The first stage began in 2022, when the U.S. froze Russian dollar assets, attracting seasoned gold investors. He believes international capital flows have caused U.S. financial institutions to “carry crazy amounts of debt.”

The second stage has not yet started, which will reflect market awareness that the Fed is powerless to rescue private equity or control interest rates, unless it buys the entire bond market.

The third stage will see a death spiral in government bonds: “The higher the interest rates, the larger the interest payments, the more severe the deficit, the greater the supply of government bonds, and the higher the interest rates,” he said. Oliver believes the ultimate outcome will either be government default, or the order for the central bank to buy all Treasuries, destroying the dollar.

He cites economic theory: “There is no way to avoid the eventual collapse that comes from credit expansion. The only choice is whether the crisis comes sooner, as a result of voluntarily giving up further credit expansion, or comes later, as the final and total disaster of the related monetary system.”

Regarding a reasonable gold price, Oliver explains that historically, the market has forced central banks to keep gold reserves at one-third to one-half of the balance sheet, which implies a gold price of $8,395 to $12,595 per ounce. Since the real value of long-term Treasuries is lower than the market price manipulated by the Fed, panic could temporarily raise the gold reserve ratio to 100%.

Mining Stock Investment Opportunities

Oliver emphasizes that even after strong rallies, mining companies remain undervalued. He notes that despite the surge in mining stocks, inflows into gold mining exchange-traded funds remain insufficient. The VanEck Junior Gold Miners ETF saw its shares outstanding drop by one-third between 2024 and 2026. “This lack of interest shows that we are at the very beginning of a bull market,” he said.

Gold ownership among professional investors and domestic institutions remains extremely low. Oliver states: “Mining companies will continue to benefit from rising gold prices, but the real boom will begin when the market starts to reprice valuation multiples. As capital floods frantically into the sector, large miners will perform well. Junior miners should perform even better, as their projects become impossible to ignore.”

He notes that since establishing Myrmikan, junior miners are for the first time beginning to reject financing deals, indicating improving industry fundamentals.

Risk Warning and DisclaimerThe market carries risks, and investments should be made cautiously. This article does not constitute individual investment advice, nor does it take into account the specific investment objectives, financial situations, or needs of any particular user. Users should consider whether any opinions, views, or conclusions in this article are suitable for their particular situation. Investments made based on this are at one’s own risk. ```