Buried Treasure: How Geopolitical Relief Could Unearth Mining Gains

Last updated: 24th August 2026 | Author: Harry Halewood

Gold’s strong 2025 performance reversed sharply after its January 2026 peak, as portfolio deleveraging, rising bond yields and expectations of higher interest rates reduced the relative appeal of non-yielding bullion.
Gold miners may provide leveraged exposure to a recovery in gold prices, as a relatively stable cost base means improvements in the gold price can translate into disproportionately stronger margins, earnings and free cash flow.
Despite the correction, gold remains well above average all-in sustaining costs, supporting miners’ capital investment and shareholder distributions, while central bank demand and de-dollarisation may provide longer-term support.
The Gold Miners Screened UCITS ETF (ESGO) offers diversified exposure to major gold mining and royalty companies alongside a 5% allocation to responsibly sourced physical gold, providing a screened route to the investment case outlined.

Gold delivered one of its strongest years on record in 2025, before falling sharply from its January 2026 peak.
Rising bond yields and geopolitical uncertainty have reduced the appeal of physical gold in the short term.
Gold miners may offer a different way to gain exposure, as their profits can rise faster than the gold price when margins improve.
Despite gold’s decline, prices remain well above average mining costs, supporting cash flow and shareholder distributions.
Central bank buying and de-dollarisation could provide further support for gold and gold mining companies.

Why did gold prices fall after reaching highs?

2025 was a year of incredible strength for gold prices. It was the fourth best year of price returns in over a century and the best since 1979.[1] Products of 1979 have mixed relevance these days, a year that gave us the Sony Walkman and the McDonalds Happy Meal. Gold, and its ongoing exploration, definitely sits in the « still relevant » category.

An interesting parallel between 1979 and now is Iran’s involvement in global oil anxiety. In the wake of the 1979 Iranian Revolution, widespread fear over supply cuts drove oil prices to more than double within a year.[2] Today, foreign conflict has replaced domestic unrest, but the fallout for global energy markets remains just as severe.

As a result of the market risk introduced by today’s Middle East conflict, investors offloaded their liquid gold exposure to de-lever portfolios, causing gold prices to surge backwards from January’s all-time-high of over $5600. Subsequent ongoing disruption has led to rising yields and market assumptions of rate hiking. Given that gold does not yield holding returns, income products like treasury bonds have knocked gold off its perch. Confidence in gold markets has been broadly shaken, causing gold to lose 37% of the value offered at its January peak.[3]

Despite triggering questions around physical gold’s viability as a ‘safety asset’, this dramatic reversal could open the door to those seeking to test their gold conviction in a different way.

Why could gold miners outperform physical gold?

Gold mining companies are largely a levered play on gold prices. Value in gold miners comes from returns net of all-in sustaining costs (AISC), meaning that any change in the gold price is exaggerated by this static minimum cost base. However, gold market exposure through miners brings quirks not found in gold commodity investment.

The opportunity for gold miners to invest operationally provides benefits that gold does not. Free cash flow yields amongst gold miners have almost doubled YTD, alongside parallel increases in capital expenditure and operating margins.[4] This demonstrates considerable forward growth potential as these firms both improve efficiency and widen margins, all while gold prices plummet. To an investor, this suggests that gold miners may be primed to take advantage of any market resurgence.

Source: VettaFi. Data as of 31.07.2036. For illustrative purposes only.

Even if we assume that prices remain where they are, the market is not to be sniffed at.

« Following their decline gold prices sit just above $4000/ounce, which for gold miners provides a 100% margin above industry average AISC of $2000/ounce.⁵ »

Hardly the doomsday scenario that some might have understood the drop in price to be.

This significant margin of return is what has provided gold miners with the cash needed for operational growth and shareholder distributions. The consensus view is that further significant decline in the value of physical gold is unlikely, meaning these considerable margins can probably be maintained. With gold prices already having adjusted significantly to oil market shocks, there’s every chance that a conclusion to Trump’s Middle East involvement could see margins widen as input costs fall.

Source: World Gold Council. Data as of 01.07.2026. For illustrative purposes only.

What factors could support gold prices in 2026?

A recent tailwind for gold has been central bank buying. Q1 saw a retraction in this source of market activity, but it has reemerged in Q2 at its highest level since 2024.[6] China’s central bank has returned to net buying on a vast scale, using the lower prices to buy in volumes not seen since 2023.[7]

The World Gold Council 2026 survey saw 83% of respondents predict some level of increase in gold as a proportion of foreign reserves, while 74% predicted a decline in dollar holdings, all data collected to a backdrop of ongoing energy market headwinds. This appears to be somewhat underway as Q2 returned a 62% increase in central bank buying year on year.[8]

De-dollarisation is another relevant theme. The uncertainty introduced by US tariffs has been compounded with the effects of the Iran war to reduce demand for US treasuries and dollars. Trump’s provisional introduction of a fresh wave of tariffs at the beginning of Q3 will only add to this uncertainty and push investors to alternative value stores, as seen earlier this year when gold overtook US treasuries as the largest component of global reserves.[9]

What could this mean for investors?

All this leaves us in a position where gold miners could be set to return to significant strength. As we watch the war in Iran unfold, the illusive end point continues to move away from us. But in this context, with markets largely adjusted to the repeated breaking of ceasefires, there is potential for assets affected by the conflict to bounce as normality returns.

With the finances of gold miners looking as strong as they are this bounce would benefit them significantly, buoyed by the leveraged nature of their exposure to physical gold. Yields have climbed 35 basis points amidst predictions of US rate hikes later this year,[10] but gold miners appear fundamentally strong. Recent governance changes have pushed mining companies to focus less on profit chasing and more on returning value to shareholders. As such they sit in a position of considerable investment potential, which shouldn’t be ignored.

Gold Miners Screened UCITS ETF (ESGO) provides access to the world’s largest gold miners and royalty companies, alongside a 5% allocation to responsibly sourced physical gold.

The Gold Miners ETF tracks the VettaFi Gold Miners Screened Index and is classified as SFDR Article 8.

Key risks

Thematic ETFs are exposed to a limited number of sectors and thus the investment will be concentrated and may experience high volatility.
The fund will be sensitive to changes in, and its performance will depend to a greater extent on, the overall condition of gold mining companies
Investors’ capital is fully at risk and may not get back the amount originally invested. Exchange rates can have a positive or negative effect on returns.

IMPORTANT INFORMATION This document is approved for professional use only.

Communications issued in the UK

The content in this document is issued by HANetf Limited (“HANetf”) and approved by Privium Fund Management (UK) Limited (“Privium”). HANetf is an appointed representative of Privium, which is authorised and regulated by the Financial Conduct Authority. The registered office of Privium is The Shard, 24th Floor, 32 London Bridge Street, London, SE1 9SG

This communication has been prepared for professional investors, but the exchange traded product (“ETCs”) and exchange traded fund (“ETFs”) set out in this communication (“Products”) may be available in some jurisdictions to any investors. Please check with your broker or intermediary that the relevant Product is available in your jurisdiction and suitable for your investment profile.

Disclaimers

Past performance is not a reliable indicator of future performance. The price of the Products may vary and they do not offer a fixed income. This document may contain forward looking statements including statements regarding our belief or current expectations with regards to the performance of certain assets classes. Forward looking statements are subject to certain risks, uncertainties and assumptions. There can be no assurance that such statements will be accurate and actual results could differ materially from those anticipated in such statements. Therefore, readers are cautioned not to place undue reliance on these forward-looking statements. The content of this document is for information purposes and for your internal use only, and does not constitute an investment advice, recommendation, investment research or an offer for sale nor a solicitation of an offer to buy any Product or make any investment.

An investment in an exchange traded product is dependent on the performance of the underlying asset class, less costs, but it is not expected to track that performance exactly. The Products involve numerous risks including among others, general market risks relating to underlying adverse price movements in an Index (for ETFs) or underlying asset class and currency, liquidity, operational, legal and regulatory risks. In addition, in relation to Cryptocurrency ETCs, these are highly volatile digital assets and performance is unpredictable.

This material does not constitute a marketing document. It is not an invitation to invest but to be read for educational purposes only. Past performance and forecasts are not reliable indicators of future results.

[1] https://www.macrotrends.net/1333/historical-gold-prices-100-year-chart

[2] https://www.federalreservehistory.org/essays/oil-shock-of-1978-79#:~:text=Rather%2C%20the%20Iranian%20disruption%20may,April%201979%20and%20April%201980.

[3] https://tradingeconomics.com/commodity/gold

[4] Source: VettaFi, Bloomberg. Data as of 30.06.2026

[5] https://www.kitco.com/news/article/2026-07-22/golds-long-term-investment-case-strong-and-miners-offer-greatest-upside

[6] https://www.gold.org/goldhub/data/gold-demand-by-country

[7] https://www.gold.org/goldhub/gold-focus/2026/07/china-gold-market-update-june-concludes-divided-h1

[8] https://www.gold.org/goldhub/research/gold-demand-trends/gold-demand-trends-q2-2026?utm_medium=email&utm_source=newsletter&utm_campaign=Gold%20Demand%20Trends%20Q2%202026%20is%20out%20now!

[9] https://sprott.com/insights/gold-overtakes-dollar-reserves-as-global-trust-shifts/

[10] https://www.cnbc.com/quotes/US10Y

Frequently Asked Questions

What drove the reversal in gold prices after the January 2026 peak?

Gold prices were pressured by portfolio deleveraging, rising government bond yields and expectations of further interest-rate increases, all of which reduced the relative appeal of a non-yielding asset.

What is the significance of rising free cash flow across the gold mining sector?

Stronger free cash flow gives mining companies greater flexibility to invest in production, improve operational efficiency and return capital to shareholders, potentially strengthening the sector’s long-term earnings profile.

Which factors could provide structural support for gold?

Renewed central bank purchasing, declining allocations to the US dollar and broader de-dollarisation trends could support demand for gold as an alternative reserve asset.

How could a reduction in geopolitical tensions affect gold miners?

An easing of Middle East tensions could reduce energy and other input costs, potentially widening mining margins even if the gold price remains broadly stable.

What are the principal risks to the gold mining investment case?

Key risks include further declines in the gold price, higher operating costs, rising bond yields, execution risk and company-specific decisions relating to production, capital expenditure and shareholder returns.

What are the principal risks to the Canadian investment outlook?

Key risks include elevated unemployment, unresolved trade negotiations, tariff uncertainty, weaker commodity prices and a slower-than-expected decline in interest rates. These factors could affect corporate earnings, dividend growth and valuations across energy, financials and real estate.

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Buried Treasure: How Geopolitical Relief Could Unearth Mining Gains

Last updated: 24th August 2026 | Author: Harry Halewood

Why did gold prices fall after reaching highs?

Why could gold miners outperform physical gold?

﻿ « Following their decline gold prices sit just above $4000/ounce, which for gold miners provides a 100% margin above industry average AISC of $2000/ounce.⁵ »

What factors could support gold prices in 2026?

What could this mean for investors?

Frequently Asked Questions

What drove the reversal in gold prices after the January 2026 peak?

What is the significance of rising free cash flow across the gold mining sector?

Which factors could provide structural support for gold?

How could a reduction in geopolitical tensions affect gold miners?

What are the principal risks to the gold mining investment case?

What are the principal risks to the Canadian investment outlook?

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« Following their decline gold prices sit just above $4000/ounce, which for gold miners provides a 100% margin above industry average AISC of $2000/ounce.⁵ »