The price of gold has been on a strong run for over a year, touching a series of all-time highs, while silver and the gold and silver mining stocks also have posted strong returns. What’s especially Interesting to me is that mainstream investors have finally begun to take notice.
The surge in monetary metals (gold priced in dollars is up 47% year to date through September, and silver is up 61%1) reflects a convergence of supportive macroeconomic factors, none of which I expect to change anytime soon. These include:
- A weaker dollar, which appears to be supported by the Trump administration. The dollar index, a measure of the greenback versus other currencies, is down 9.9% year to date through September.
- Expectations for real interest rates – gold prices generally move inversely to real rates. The US Federal Reserve (Fed) has begun cutting interest rates, which is generally positive for monetary metals. A delay in the Fed’s rate-cutting cycle would be negative for gold.
- Mounting concern about the sustainability of the US government’s balance sheet and increasing deficit, and the impact this has on the risk-free status of US Treasuries.
- Heightened geopolitical and market uncertainty, which plays to gold’s traditional role as a safe haven asset.
It had been to me a curious element of the rally in gold, silver and miners that their performance through the first half of the year didn’t attract significant investment flows into exchange-traded funds (ETFs) from mainstream, long-only investors -- both individuals and institutional buyers. The price rally through the first half of this year was fuelled mostly by hedge funds chasing momentum in the futures market.
That has changed, with the pace of flows into gold and silver and mining ETFs now on the rise. Global net flows into gold ETFs in the last week of September were $3.7 billion, bringing the total invested in gold ETFs to $462 billion, according to the World Gold Council.2 Another sign for me of gold’s popularity was the comment by Morgan Stanley Chief Investment Officer Mike Wilson, who said last month that a portfolio of 60% stocks, 20% bonds and 20% gold would be a more resilient hedge against inflation than a traditional 60/40 stocks/bonds portfolio.3
Central banks remain active buyers of gold, which they use as a principal reserve asset to protect against inflation and risk, and this trend has also supported the market. Central banks accumulated over 1,000 tons of gold in each of the three years through 2024, up from the 400-500 tons annual average over the preceding decade, according to the World Gold Council.
Turning to gold and silver miners, their shares also have risen sharply this year but from a very low base. The Van Eck Gold Miners ETF is up 125% year to date through September. However, in my view, valuations for the miners remain modest, with shares still trading below their long-term averages on price-to-cash-flow and price-to-NAV measures (see chart below).
Rising profitability, strong balance sheets, and improving capital discipline potentially support the case for a further re-rating for the miners, in my view.
Modest valuations for gold & silver miners
Silver is often seen as gold’s more volatile monetary metal peer, in that it tends to amplify gold’s moves on both the upside and the downside. I mentioned silver’s increase this year, but the white metal rose above $50 an ounce in October to a new record high.
What makes silver particularly interesting is its persistent supply deficit – demand has exceeded supply since 2021 – and is expected to do so again this year, according to the Silver Institute.
This shortage reflects growing demand for silver in industrial uses: electronics, advanced batteries, solar panels and medical technology. Industrial demand rose 4% in 2024.
In my view, gold and silver are real money; they can’t be printed by governments or central banks. Silver, along with the gold and silver miners, tends to be more volatile than gold. We think that gold, silver and the mining equities have a significant role to play in a well-diversified investment portfolio, especially in the current market and in a macroeconomic environment. It’s good to see that long-only investors are finally taking notice.
Footnotes
1Source: Bloomberg, as at 1.10.25, for all performance data in this article, except where noted. Please note that past performance is not guarantee of current or future returns.
2Source: World Gold Council, Weekly Markets Monitor, 29.09.25
3Source: Reuters as at 16.9.25. https://www.reuters.com/markets/wealth/morgan-stanley-cio-favors-602020-portfolio-strategy-with-gold-inflation-hedge-2025-09-16/
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