Gold and silver priced in dollars touched record highs in January before falling back and losing ground this year to date through 29 June. However, we think the medium to long-term fundamentals for monetary metals remain supportive, and we are willing to be patient.
One of the most interesting parts of the gold and silver market to us right now are the miners. We see them as cheap versus history, increasingly profitable and mostly unloved. Much of the equity market has been transfixed by technology stocks.
Modest valuations
Valuations for the gold and silver mining company stocks that we track are modest compared to history. Silver miners trade at a price that is 1.26-times their net asset value, while gold miners trade at around 0.7-times their net asset value.1This is below the valuations for both gold miners and silver miners in 2018. The profitability of miners has increased because the value of the monetary metals they are producing has risen. Gold miners’ profitability as measured by their free cash flow margin was 52% at the end of May, versus around 15% in 2018. Similarly, the free cashflow margin of silver miners was around 35% at the end of May, versus around 14% in 2018.2
Rising profitability
The rising cashflow margins reflect that gold and silver priced in dollars rose 65% and 148%, respectively in 2025, the largest annual returns in percentage terms for each since 1979.3
FCF Margin for Gold Miners
FCF Margin for Silver Miners
P/NAV for Gold Miners
P/NAV for Silver Miners
Sometimes I hear people say that gold and silver have risen too much to invest in. The modest valuation of miners undermines this argument, in my view.
Speculative investors, including hedge funds, were responsible for driving up gold and silver prices over the last two years. These sophisticated investors have pulled back from gold and silver trading since March and turned their attention elsewhere.
Long-only investors, meanwhile, which include pension funds, mutual funds and wealth managers, remain under-allocated to monetary metals, in our view, as they follow the market momentum and focus on technology companies, including chipmakers, the so-called US hyperscaler companies (including Alphabet, Meta, Microsoft and Amazon) and Elon Musk’s SpaceX.
Macro uncertainty
In our view, technology returns have been so strong over the last few years that long-only investors are afraid to “leave the pack,’’ even if they are aware that the valuations for big tech companies may be excessive.
There has been an elevated level of uncertainty in markets related to geopolitics generally and the war in the Middle East specifically. There have been signs of progress recently but the outlook for global energy supplies and their impact on inflation remain difficult to predict in our view.
One factor I see as increasingly significant for silver and other metals is the ramp-up in AI-related demand. The hyperscaler companies have significant capital expenditure plans to build out computing capacity.
Data centres and silver
Amazon, Meta, Microsoft and Alphabet have announced plans to increase their AI infrastructure spending from $410bn last year to $725bn this year.4 That is larger than the economies of either Singapore or Norway as measured by 2026 gross domestic product.5
Data centres use large quantities of energy, water and metal, in particular, copper and aluminium, but also silver, due to its electrical and thermal conductivity properties.
Demand for the white metal has outstripped supply annually since 2021, according to the Silver Institute.6 The institute expects data centre demand will partially offset weaker silver demand in the photovoltaic (solar power) industry. Both gold and silver mining companies have been undertaking mergers and acquisitions to acquire additional resources.
Silver restrictions
China has introduced export restrictions on silver, while the US in November added silver to its critical minerals list. I believe that rising demand in technology applications will require additional mining capacity for metals including silver. It seems that the metaverse needs molecules and the physical world after all.
To be sure, mining companies can be risky and operationally complex businesses, and this is a challenging time for investors. Geopolitical conflicts have introduced additional volatility and uncertainty to markets, and the path of interest rates and inflation are difficult to forecast and important indicators for the direction of gold and silver prices.
Gold and silver are seen as safe-haven assets in periods of market volatility, geopolitical instability and economic uncertainty due to their diversification and liquidity attributes. We are staying patient and positive about the outlook, and we believe gold and silver as well as gold and silver mining equities can play an important role in well-diversified investment portfolios.
Footnotes
1Source: Jupiter data as at 01.06.2026.
2Source: Jupiter data as at 01.06.2026.
3Source: Bloomberg as at 01.06.2026 Past performance does not guarantee future returns.
4Source: Financial Times, 04.04.26
5Source: Worldometer, 05.06.26 https://www.worldometers.info/gdp/gdp-by-country/
6Silver Institute as at 26.2.26. https://silverinstitute.org/global-silver-investment-to-remain-strong-in-2026-against-the-backdrop-of-a-sixth-consecutive-annual-market-deficit/
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