Gold mining companies extract gold and silver from mines around the world, with margins determined by the spread between gold spot prices and all-in sustaining costs (AISC) of production. Gold is simultaneously an industrial metal and a monetary asset — investors buy gold miners as leveraged proxies for the gold price, seeking protection from currency debasement, inflation, and geopolitical uncertainty. Record central bank gold buying from emerging market central banks diversifying away from US Treasuries has driven gold to all-time highs above $3,000/oz.
Gold spot price (XAU/USD) is the primary driver — every $100/oz move in gold typically moves miner earnings 15-25%. AISC per ounce determines operating leverage to gold price. Watch reserve replacement — production minus new reserve additions signals mine life depletion. Real US interest rates (TIPS yields) have historically inverse correlation with gold.