The Last Domino: Why the Gold Juniors Could Explode as Debt and Rates Collide

🧱 The Setup: A Gold Market Built on Imbalance

The past year has seen a strange dynamic in gold.

‍

• Central banks are buying at record levels.
• Physical demand is soaring - even Costco is selling record amounts of gold.
• Gold has quietly surged above $3,400 and is consolidating near all-time highs.

‍

But one key piece is missing: the juniors.‍

“The seniors typically lead, but then the juniors kind of come in and outperform… we haven’t seen that yet.”

‍

Despite rising gold prices, junior mining stocks remain historically undervalued. And the reason, says Nomi Prins, lies in the macro: sticky rates, Fed hesitation, and a market waiting for the next signal.

🧨 The Revelation: Liquidity Is Coming - And It’s Headed for Gold

‍

What changes everything? Rate cuts. Liquidity. And a Fed that’s cornered by fiscal math.

“I'm expecting 100 basis points in cuts this year. Somewhere between two and four moves—because it has to. That’s the reality.”

‍

Prins points out that while the Fed has dropped short-end rates in the past, long-end rates—like 10 and 30-year Treasuries—have stayed elevated. That’s because the market isn’t convinced. Not yet.

“The long-term Treasury bonds have not had their yields diminished. So the White House wakes up every day and has to pay nearly a trillion dollars in interest.”

‍

This dynamic is unsustainable. According to the U.S. Treasury, interest payments in FY2024 are projected to surpass $1.1 trillion, now the fastest-growing line item in the federal budget.

‍
📉 Fed Policy Meets Fiscal Reality

That mounting interest bill creates an impossible dilemma:

• If the Fed doesn’t cut, growth stalls and debt costs soar.
• If the Fed does cut, inflation could re-emerge and credibility is lost.

‍

But one thing is clear: they cannot normalize rates without putting incredible stress on the system.

“Most of that interest is on long-term Treasury bonds… and Powell’s Fed is hemorrhaging money because it has to repatriate losses from the banks to the Treasury.”

‍

Behind the scenes, the Fed’s Quantitative Tightening (QT) program has all but stopped. The balance sheet runoff has dropped to $2 billion/month—a rounding error compared to its $6.8 trillion portfolio.

‍

Translation: QE is already being hinted at. And once it returns, capital will seek real assets—and yield.

‍
💰 Gold Miners Flush With Cash—But Still Undervalued

‍

The major gold producers - Barrick, Newmont, Agnico Eagle - are seeing their free cash flows explode. At gold’s current price, they are generating billions in earnings, and many are already increasing dividends and buybacks.

‍

But they’re not just sitting on cash. They’re hunting.

“The mid-tier and big-tier miners are out hunting for assets… there’s going to be bids in the market for juniors with permits, good jurisdictions, and relationships.”

‍

According to S&P Global, global M&A activity in the gold space surged 73% year-over-year in 2024, with juniors representing the majority of targets. The logic is clear: big miners need new ounces, and junior explorers have what they need.

‍
🔄 Sentiment Is Quietly Turning

‍

While retail investors have lagged, the tide is turning:

“Retail was selling gold in 2023 and early 2024… but now they’re buying again.”

‍

Anecdotal evidence is everywhere—from Costco’s gold bar rush to local gold brokers hiring extra staff to handle walk-in demand.

And institutions are starting to sniff out the trend. Alex noted that,

“I did see that institutions—huge—$75 billion came into the space last quarter. That was the first big reversal.”

‍

Data from Bloomberg confirms that gold ETFs saw net inflows in Q2 2025 for the first time in over a year. And global central bank buying remains robust, led by China, India, and Turkey.

‍
🌍 The Geopolitical Catalyst

‍

This isn’t just about rates or inflation. It’s also about global realignment.

“Every time the U.S. and China have a conversation about trade—it benefits gold. It doesn’t matter where that conversation goes.”

‍

As nations de-dollarize trade—particularly in oil and energy—gold is quietly becoming the neutral collateral layer. It’s a Tier 1 capital asset under Basel III. It’s not anyone’s liability. It’s trusted.

“There’s a chain from domestic finance to trade partnerships to an international need for objectivity—and that’s also driving gold.”

‍

And with ongoing tariff escalations, diverging alliances, and U.S. fiscal fragility, that trend isn’t slowing down.

‍
⛏️ The Juniors: Last to Move, Fastest When They Do

‍

The final piece of the puzzle? The juniors. While gold has outperformed the miners in recent years, Nomi believes that may soon reverse.

Historically, junior gold equities lag majors - but when they move, they move fast. In the 2009–2011 gold run, the GDXJ (Junior Gold Miners ETF) outperformed GDX (Seniors) by more than 2x at the peak.

‍

Right now, that breakout hasn’t happened. But Nomi believes the setup is aligning:

• Fed cuts are increasingly likely
• Big miners are flush with cash
• Retail and institutional demand is rising
• Gold is consolidating near highs

“There’s this switch—easy money is coming. When people see we’re going back to easing, that’s when new capital floods in.”

‍

⚠️ Final Word: When the Liquidity Turns, Juniors Will Be the Tipping Point

‍

You don’t need a crystal ball to see the pressure building. Nomi believes the Fed is cornered. As the debt surges, physical demand for gold will continue to surge. So, she continues to believe the world wants real, neutral stores of value.

“Gold’s already up. The seniors are flush. The juniors are next.”

When the rate cuts arrive - and liquidity flows back into the system - juniors could be the last domino to fall. Or rather, to fly.

‍