Gold shares delivered the standout month of the Australian reporting season.
Morgan Stanley calculates that the sector rose 34% across August.
The gold price then fell 2.9% on Friday night to US$4,529.90 an ounce.
Traders were reacting to rising expectations of United States interest rate hikes, so the question that remains is whether September can continue August's good momentum.
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Why gold shares ran so hard
Gold spent most of August trading around US$4,500 an ounce.
At that level, the economics of an Australian gold mine look extraordinary.
My colleagues noted that the conversation has shifted away from the gold price itself and toward cash flow, balance sheets and dividends.
That is what a maturing sector looks like, however, any future gains may be harder to come by.
Northern Star: a record year with a warning attached
Northern Star Resources Ltd (ASX: NST) is the largest of the ASX gold shares and the clearest illustration of the problem at hand.
The company's FY26 result delivered revenue of $7.6 billion, underlying EBITDA of $4.3 billion and underlying net profit after tax of $1.8 billion.
The company sold 1.54 million ounces at an all-in sustaining cost of $2,698 an ounce.
Lastly, the full-year dividend rose to 55 cents per share.
Then you reach the cash flow statement.
Underlying free cash flow was just $190 million, because capital spending at KCGM has hit its peak.
FY27 guidance sharpens the point further, with production of 1.5 million to 1.65 million ounces expected at an all-in sustaining cost of $3,050 to $3,450 an ounce.
That is a rise of several hundred dollars an ounce in a single year.
There is a leadership change to absorb as well.
Stuart Tonkin stepped down as managing director on 28 August, with Ryan Gurner serving as interim chief executive until Suresh Vadnagra takes over on 5 October.
Capricorn Metals: the low-cost alternative
Capricorn Metals Ltd (ASX: CMM) is a fraction of Northern Star's size. The company produced a record 123,589 ounces in FY26 at an all-in sustaining cost of $1,629 an ounce.
Cash costs before royalties were only $1,251 an ounce.
Cash and gold holdings stood at $507 million, and the company declared a fully franked final dividend of 5 cents per share in late August.
FY27 should be bigger.
Capricorn is guiding to 137,000 to 147,000 ounces as the Karlawinda expansion is commissioned, heading toward a 150,000 ounce annual run rate.
Costs are expected to rise to between $1,900 and $2,100 an ounce, which is still well below Northern Star's guidance.
Behind that is Mt Gibson, where reserves now stand at 5.2 million ounces and federal environmental approval has been granted.
What could end the run in gold shares
Two things would do it.
The first is a sustained fall in the gold price, and the rate hike expectations driving Friday's move are a genuine risk.
Higher real interest rates make a non-yielding asset less attractive, and gold has always been sensitive to that.
The second is cost inflation, which the FY27 guidance from both companies already flags clearly.
Foolish takeaway
A 34% month is most likely not repeatable, and I would not buy this sector expecting one.
What has changed is that the better operators are now generating real cash and paying real dividends.
Capricorn looks like the more disciplined business on cost, while Northern Star offers scale and a much larger production base.
Both need the gold price to hold somewhere near current levels to justify their FY27 spending plans.
For investors who want exposure, gold shares are worth owning as a portfolio hedge.
