Gold Shines While the World Shakes

In a year where financial markets are being shaken by a cocktail of uncertainties, one element stands out as a reliable beacon: gold. As equity markets swing in response to concerns about geopolitical tensions, escalating tariff wars between economic superpowers, persistent inflation fears, and increased central bank interventions, gold is once again fulfilling its classic role as a safe haven.

These so-called "tariff wars"—import duties and export restrictions used by nations to protect economic interests—are just one layer of the geopolitical unrest. Add to that the fragile situation in the Middle East, weak macroeconomic data from China, and recurring recession fears in the U.S., and it’s no surprise that investors are turning to tangible value.

The gold price recently surpassed the $3,000 per ounce mark—a rise of more than 16% since the beginning of this year and over 30% year-over-year. This reaffirms the precious metal’s long-standing reputation as a symbol of security and value.

But those seeking real returns have looked beyond the metal itself. At a mining conference in Zurich, where some of the most efficient gold producers convened, it became clear where the real leverage lies: in the mining companies themselves. Several publicly listed gold miners reported record results, while keeping production costs impressively low. The so-called "all-in sustaining cost" (AISC)—a comprehensive measure of gold production costs including maintenance and administrative expenses—ranged from $1,500 to $1,600 per ounce for most producers, with some outliers even below $1,000. With a gold price above $3,000, the math is straightforward. The operational margins are striking.

This gap illustrates the principle of operational leverage: a relatively small increase in the gold price can lead to a much larger increase in profitability for mining companies. Naturally, this also brings greater volatility, but for those who can tolerate it, the potential returns can be highly attractive.

What’s notable in all of this is Bitcoin’s role. Long promoted as the “new gold,” that narrative seems to fall short in times of stress. While gold has surged significantly, Bitcoin has dropped nearly 20% since the start of the year. Despite still being up 12% year-over-year, the cryptocurrency has yet to prove itself as a true hedge in turbulent times.

Gold remains not only topical, but also relevant. For those interested in the companies behind the metal, more information is available through our usual channels.

Disclaimer:

 This material is provided for informational purposes only and does not constitute investment advice, an offer, or a solicitation to buy or sell any financial instruments. Past performance is not indicative of future results. Please consult with a financial advisor before making investment decisions.