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Forbes
21-04-2025
- Business
- Forbes
Gold Keeps Setting New Record Prices. So Where Are The Investors?
gold Gold is hitting records in more ways than one. In nominal terms, the yellow metal set multiple new all-time highs last week, and today, the metal exceeded $3,400 an ounce for the first time ever. On an inflation-adjusted basis, gold also notched a new record price, surpassing the longstanding record set in 1980. Inflation-adjusted gold at a new record high after 45 years There could be further gains in the coming months, if analyst expectations come to fruition. Goldman Sachs sees gold topping out at $3,700 by the end of this year and $4,000 an ounce by mid-2026. Gold miners, I'm happy to report, also appear to be back in favor. The IBD 50, Investor's Business Daily's flagship screen of growth stocks, now includes about a dozen gold mining names. Companies that were just added to the list include DRDGold, Eldorado Gold, Gold Fields, Randgold Resources, Osisko Gold Royalties, Royal Gold, Triple Flag Precious Metals and Wheaton Precious Metals. We're proud to hold shares in 11 of these companies across one or more of our gold equity or resource funds, as of March 31. Below is a comprehensive list. IBD 50 gold names we currently own This gold rally is classic Fear Trade. It comes as investor sentiment has collapsed to its lowest level in three decades, according to April's BofA Global Fund Manager Survey. Eighty-two percent of participants said they believe the global economy will shrink, marking the most pessimistic reading in the survey's history. The value of the U.S. dollar, when measured against a basket of world currencies, has sunk to a three-year low as traders await more details on the fallout from President Donald Trump's trade war. The ICE U.S. Dollar Index is down 8% so far in 2025, making this the worst start to a year in the index's four-decade history, according to the Wall Street Journal. Granted, a weaker greenback has its advantages: It makes the price of goods being exported out of the U.S. more affordable to foreign buyers, helping exporters. My concern is the reason for the dollar's decline. Foreign central banks have been dumping U.S. debt for a while, but the selling pressure of longer-dated bonds has increased in recent months. In the four months through February, overseas institutions sold a combined net of approximately $90 billion. Despite the rally, retail investors are still sorely underexposed. Gold-backed ETF assets currently represent less than 2% of all ETF assets, down from approximately 8% in 2011. Investment in gold ETFs has significantly picked up since February, but holdings are still off by about 19% from their highs in October 2020. Implied investor allocation to gold is relatively low The market share for gold mining ETFs is even lower, representing less than 0.5% of total equity ETFs. That's a shame because gold stocks have been among the best bets of the year so far. The NYSE Arca Gold Miners Index, or GDM, has advanced roughly 50% through Thursday's close, far outperforming the S&P 500, which has lost close to 10% over the same period. Believe it or not, the best-performing S&P 500 stock so far this year is Newmont, the world's largest gold mining company. Newmont is up a little over 50% through April 17, followed by CVS Health, up 47%. Analysts have rosy expectations for Newmont's year ahead. Those polled by FactSet say they project profits to rise 13% to $3.92 per share this year, followed by an 8% rise to $4.23 per share next year. This rally isn't limited to U.S.-based gold stocks. South African producers, as measured by the rand-priced FTSE/JSE Precious Metals and Mining Index, hit a new record high as the price of gold has exploded to the upside, crossing above R60,000 per ounce this month for the first time ever. South African Gold Miners at a Record High Many American depository receipts (ADRs) of South African producers have done exceptionally well so far in 2025, with Sibanye Stillwater up about 50%, AngloGold Ashanti and DRDGold both up 93% to 94%, and Harmony Gold up a remarkable 113%. Just as investors' portfolios are underexposed to the yellow metal, gold mining stocks look incredibly undervalued relative to the market. The chart below shows the ratio between the GDM and the S&P 500. You can see that, relative to the S&P, gold stocks have traded in a range-bound pattern going back about 10 years. Can gold miners finally break out of the range-bound trading pattern? So how do mining stocks break out of this pattern? Either gold equities continue to trade up, or the S&P 500 continues to fall (or a combination of the two). In any case, this could be a good buying opportunity. As always, I recommend a 10% weighting, with 5% in physical gold (bars, coins, jewelry) and the other 5% in high-quality gold stocks.
Yahoo
18-04-2025
- Business
- Yahoo
Why Gold Prices Surged to a Record High on Wednesday
Gold futures rose to a record high of more than $3,350 an ounce on Wednesday as stocks sold off after chip giant Nvidia warned its earnings would take a $5 billion hit from escalating tensions between the U.S. and China. Gold prices have soared more than 25% so far this year, boosted by uncertainty about President Trump's tariff policies and the economic damage they could inflict. Analysts with the World Gold Council believe central banks and investors are likely to continue driving up the price of gold as geopolitical tensions prices rose to another record high on Wednesday as stocks tumbled after AI chip giant Nvidia warned its earnings would take a $5 billion hit from escalating tensions between the U.S. and China. Gold futures contracts were up more than 3% at a record high of about $3,350 an ounce on Wednesday afternoon. Gold prices have soared more than 25% since the start of the year as investors have flocked to safe havens amid mounting uncertainty about tariffs and their economic fallout. Gold ETFs recorded net inflows every week but one in the first quarter, with demand jumping to its highest level since 2022 in late February and again in late March. President Trump's announcement earlier this month of sweeping 'reciprocal' tariffs may push demand even higher in April. In the week after Trump's tariff announcement, 49% of fund managers surveyed by Bank of America labeled 'long gold' Wall Street's most crowded trade. It was the first BofA Global Fund Manager Survey in two years in which 'long Magnificent Seven' wasn't thought to be the most popular trade. The preponderance of fund managers (42%) think gold will be the best-performing asset of 2025. 'The case for adding gold allocations has become more compelling than ever in this environment of escalating tariff uncertainty, weaker growth, higher inflation, geopolitical risks & diversification away from US assets & the US$,' wrote UBS analysts in a note on Monday. "We acknowledge the poor historical operational/cost performance of gold miners but remain bullish gold equities," the analysts continued. Shares of Newmont (NEM) and Barrick Gold (GOLD) both followed gold prices higher on Wednesday. There are several reasons to expect the recent run-up to persist, according to the World Gold Council, a gold miner trade association. First of all, central banks have been key drivers of demand for gold over the past few years, and researchers don't expect them to let up soon. Investors are also historically underexposed, with gold ETFs accounting for just 1.6% of the value of all U.S. ETFs, compared with 7.6% in 2011—the peak of a rally comparable to today's. Plus, geopolitical and economic uncertainty are likely to remain elevated as the end of the White House's 90-day tariff pause approaches. Risks to the rally include the possibility that soaring prices slow demand from investors and central banks, or that a liquidity crisis—of which the analysts see increasing risk—could force investors to sell gold to cover margin calls. The resolution of trade tensions through bilateral agreements could also reignite investors' risk appetite and act as a headwind to gold. Read the original article on Investopedia Sign in to access your portfolio
