As I write this, gold continues to trade above $2,500 an ounce after surging past the psychologically important level for the first time ever in mid-August. For seasoned gold-mining investors, this should be a moment of validation. After all, the yellow metal has long been seen as the ultimate hedge against economic uncertainty. And yet, despite the bull run, gold stocks — those companies that mine, process and sell the metal — are trading at historically low valuations relative to the market.

But first, why is this happening? The primary culprit for this disparity, I believe, lies in the impact of interest rates and central banks’ gold-buying spree. The real, inflation-adjusted 10-year Treasury yield rose from a low of around –1.2 percent in August 2021 to nearly 2.5 percent in October 2023, and for many investors, particularly those in Western countries, rising yields are a signal to sell non-interest-bearing gold.

That’s exactly what happened. From the en