Golden Era: Why 2025 Could Shine Bright for Gold and Miners

Published Date: November 21, 2024

| Author: Eric Strand, Founder and CEO, AuAg Funds

Inflationary boom starting in 2025 – gold may go to 3,300

Authors’ views are their own and not those of HANetf.

We foresaw a sequence of new all-time highs for gold in 2024, which we also got. The October all-time high was 2,790 USD per troy ounce signaling that the new long-term bull market has begun.

Also, we projected that gold would end 2024 with at least a 20 per cent increase in USD and anticipated, at the same time, that mining stocks would surpass the actual commodity in performance.

That gave us the target of 2,475 USD, but as the gold price formally flew through that number, we later had to raise our target to 2,750.

After the 2,790 high we have seen gold cool down to the 2,550 area which leaves room for a strong finish up to 2,750 again.

The cooling down of the gold price has been the result of the market “believing” that the new president of the USA will be able to lower their national debt.

We, however, do not believe that. We believe government costs may become lower but so will also income. All together resulting in a net deficit just like the last term Donald Trump was president. Actually, M2 (money supply) and national debt has grown in a similar rising pace regardless of republicans or democrats in the driver seat. Gold had a first down reaction when Donald Trump was elected last time and then after that gold still returned over 50 per cent during the 4 years presidency.

We think we will see an inflationary boom in the coming years. An economic environment where commodities will thrive.

There will be more US tariffs and global trade wars. US policies will result in higher unemployment, forcing much lower rates and we will also see devaluations in many other countries to compensate for the tariffs.

A new future, with continued de-globalistaion and “MeFirst-mentality”, will also create geopolitical tensions and higher production costs in most sectors passed over to consumers.

“This inflationary boom will underpin gold’s future rise to over 3,000 USD, and our price target for gold in 2025 is 3,000 up to 3,300 USD per troy ounce.”

The competition between fossil fuels and new energy will however keep energy prices low. Yes, this will have a small deflationary effect, but it will especially benefit companies that use a lot of energy in their production, like miners.

We also anticipate silver to come back really strong and narrow the GSR (GoldSilverRatio) to at least the 70-80 area. Long term we predict that the GSR will drop below 30:1, setting an initial goal for 2025 slightly below 70:1.

The above view and factors give us a target for silver around 50 USD per troy ounce, making it even more interesting than gold.

Our belief that central banks would shift away from rate hikes and adopt a more accommodative policy stance in 2024, came true and we foresee even more aggressive rate cuts during 2025.

Since the great financial crisis, central banks have consistently increased their gold reserves, setting new records in both 2022, 2023 and 2024. 2025 does not look to become any different.

Margin expansions – miners will rock it in 2025:

The really big driver for returns in the mining sector will be explosive margin expansions.

High and stable commodity prices, inflationary policies all over the world and at the same time low energy prices are a perfect storm for miners.

Since 2021, companies in the commodity sector have sustained robust cash flows, with precious metal producers boasting the highest margins.

The margins came down with the high-inflation period which has created this very exciting situation with amazing margin expansions coming.

Fundamentals – 10 base nuggets speaking for miners:

Gold miners are historically undervalued relative to gold, a trend likely to reverse and overshoot during the forthcoming secular gold bull market.
Gold miners have significantly reduced their debt levels in the past decade, unlike other sectors, which have accumulated more.
Gold miners have become more shareholder-friendly and are more cautious with new costly projects.
Merger and acquisition activity in the mining sector is vigorous, driving up premiums.
Gold miners have been making record share buybacks over the past three years and they have made the buybacks without financing it with debt as in most other sectors.
There is a strong trend of increasing dividends among gold miners.
Smaller large caps and larger mid-caps are expected to outperform the mega-caps within the sector.
Gold miners have a very low correlation with the broader stock market and should become more appealing to large investors seeking alternative sources of return. This should lead to strong capital inflows and, subsequently, higher equity prices.
Gold miners are also historically undervalued compared to the S&P 500, still presenting a unique and attractive entry point.
The dollar may have topped in 2024 and therefore gold and silver mining companies are poised to become particularly appealing to European investors in 2025 due to the “2x/FX effect”. If mining stocks are twice as leveraged to the price of gold, which we expect to rise by 20 per cent, this will translate to a 40 per cent gain for mining stocks. In combination with a weaker USD, say a 10 per cent drop compared to the EUR/GBP, the net return for a European investor in gold would be a 10 per cent increase and a 30 per cent net return in mining stocks. This would result in a threefold return, not merely double.

Professional investors only. Capital at risk.

Sources available upon request

AuAg ESG Gold Mining UCITS ETF (ESGO) aims to provide exposure to an equal-weighted basket of 25 ESG screened companies that are active in the gold mining industry.

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Golden Era: Why 2025 Could Shine Bright for Gold and Miners

Inflationary boom starting in 2025 – gold may go to 3,300

﻿ “This inflationary boom will underpin gold’s future rise to over 3,000 USD, and our price target for gold in 2025 is 3,000 up to 3,300 USD per troy ounce.”

Margin expansions – miners will rock it in 2025:

Fundamentals – 10 base nuggets speaking for miners:

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“This inflationary boom will underpin gold’s future rise to over 3,000 USD, and our price target for gold in 2025 is 3,000 up to 3,300 USD per troy ounce.”