(Kitco News) - In a wide-ranging interview, iconic mining entrepreneur Ross Beaty declared the current rally in resource equities a long-term “secular breakout” and advised investors to hold their positions. He also delivered a sober warning against widespread market expectations of a major M&A frenzy, calling the impulse for deal-making an “addictive” trap that has historically destroyed shareholder value.
In the premiere of the new Kitco News series “Legends,” Beaty, a geologist who has founded five separate billion-dollar-plus public companies, offered a deeply nuanced take on the euphoric market. With gold holding strong near $3,575 an ounce and the VanEck Gold Miners ETF (GDX) rallying over 95% year-to-date, Beaty’s commentary provides a seasoned perspective on the opportunities and pitfalls ahead.
“It really is a secular breakout,” Beaty said, comparing the current environment to past cycles in 2002 and 2009. “When it happens, do not sell. Resist the temptation to sell… This is likely to be a relatively long-term market move because it's been pent up for so long”.
According to Beaty, the rally is a long-overdue catch-up after years of equities underperforming the gold price, as investor capital flowed to “other flavors of the month” like Bitcoin and meme stocks. He stated that with high metal prices, well-run companies are “gushing money,” with margins expanding as the metal price is rising much faster than inflationary cost pressures.
The M&A Myth
Beaty’s view on mergers and acquisitions, however, runs counter to a growing consensus among many market analysts predicting a new wave of consolidation. He expressed strong skepticism that a flurry of deals is imminent.
“I don't really see a lot of M&A happening,” he said bluntly. He explained that many large companies are using their increased cash flow to return capital to shareholders through buybacks and dividends, or are focused on paying down corporate debt accumulated during leaner years. He described the corporate impulse for deal-making as dangerous .
“It's very addictive to be doing this,” he said. “Doing these deals is really fun… and it's what naturally drives mergers. But there's been a lot of shareholder wealth destruction… through bad deals.”
A Reality Check on Critical Minerals
The mining legend also offered a sharp critique of the political focus on "critical minerals," calling the narrative largely misguided and uninformed about the realities of the supply chain. “I kind of laugh at it… [it’s] propagated by economists and politicians who have no clue,” he said.
According to Beaty, the world has plenty of minerals, but the West lacks the refining and smelting capacity to compete with China. This aligns with recent reports from the International Energy Agency that show China refines nearly 90% of the world’s rare earth elements.
“What there is not is a supply of metals - in other words, refined product,” he stated. “That's where China dominates. If we put tariff barriers up to Chinese metals, you're just going to have higher prices for all metals. If that's what politicians want, that's what they're going to get”.
The Beaty Playbook
When asked what has become more important in his decision-making over a forty-year career, Beaty pointed to resilience through diversification. He cited three recent challenges at his operations—a pit wall failure, a slow mine startup, and a community-related shutdown—to illustrate his point. “If we were a one-asset company only holding that asset, our stock price would have been crushed,” he explained.
He revealed that the key human element behind his deal-making is trust built over decades, noting a recent investment was made simply on the recommendation of a geologist he has worked with for over 22 years.
Beaty also pushed back on the common narrative of a supposed talent crisis in the mining industry. “I don't agree with it,” he said, pointing to the thousands of young international employees at his companies. “There's good talent available. You've got to find it”.
For Ross Beaty's in-depth conversation on the markets, his investment playbook, and the lessons learned from a legendary career, watch the full interview above.