ESG Gold Mining ETF Report | March 2024

Gold Mining ETF Macro Outlook

  • We are now facing a situation in the stock market where the five largest companies on the US stock exchange (S&P 500) together account for more than 25% of the market. When the IT bubble burst, the five largest companies were up to 18%.
  • Another indicator shows that the largest companies, measured as the top 10% of all American stocks, are valued at over 75% of the market value of the entire exchange. This is something we have not experienced since 1929.
  • Common to “boom & bust periods” such as the banking, finance, and real estate crisis in the early 90s, the IT bubble in 2000, and the financial and debt crisis in 2007/2008 was that they caused significant, almost parabolic, increases before the bubble burst. As we have written in previous letters, the excessive amounts of stimulus and money printing contribute to large bubbles.
  • For investors, the art is to secure and realize profits gradually. This is especially important when more and more signals become visible that individual segments are in bubble valuations. The risk and most common scenario is that investors see large unrealized gains on their investments – but do nothing, only to see the same “perceived gains” melt away during subsequent corrections and downward trends.
  • If “sell high” is part of the success in creating real “relative” wealth, then “buy low” is what has really made a difference between those who have succeeded in investments and those who have not.
  • The question is whether tech stocks have reached an overvaluation relative to the rest of the stock market (S&P 500), just like during the IT bubble in 2000. Prices can always continue upward, but it requires more and more capital to push the stocks up another percentage point. Perhaps it is a good opportunity to secure parts of the profits – and stay partly invested if it still feels like some momentum is left in the upward movement.
  • Other sectors than tech, such as commodities, can, on the other hand, be seen as low-valued relative to the market. A movement up in the relation Gold Miners/S&P500 towards the historical average and then a bubble top up for the gold mining companies shows a huge opportunity. The last upward journey for the companies gave 10-20x.
  • If you have been in the industry for a long time, you know that all great fortunes have been created by those who bought really, really cheaply. Those who, for example, became billionaires in real estate bought a lot when the real estate crisis was at its ultimate low and no one wanted to buy. Right now, there are great opportunities to buy cheaply, for example, in the commodity sector.

Sources available upon request.

Gold Mining ETF Performance
As of 29.02.2024

AuAg ESG Gold Mining UCITS ETF (ESGO)-10.00%-20.81%-14.91%-21.19%-11.66%N/A-27.62%
Solactive AuAg ESG Gold Mining Index-9.96%-20.72%-14.71%-21.13%-11.09%-19.77%-26.50%

Please note that all performance figures are showing net data. Source: Bloomberg / HANetf. Data as of 29/02/2024

Performance before inception is based on back-tested data. Backtesting is the process of evaluating an investment strategy by applying it to historical data to simulate what the performance of such a strategy would have been. Back-tested data does not represent actual performance and should not be interpreted as an indication of actual or future performance. Past performance for the index is in USD. Past performance is not an indicator for future results and should not be the sole factor of consideration when selecting a product. Investors should read the prospectus of the Issuer (“Prospectus”) before investing and should refer to the section of the Prospectus entitled ‘Risk Factors’ for further details of risks associated with an investment in this product. When you invest in ETFs your capital is at risk.