Over the last couple of months, I’ve been talking about the rise in the value of gold. This week the value of the precious metal topped $US 4,000 an ounce and in Aussie dollar terms, it broke through AU$6,000 an ounce.
The below chart tracks the return on gold (the orange line) compared to the US sharemarket (blue line) for the last 30 years. As you can see, it is rare for gold to outperform the US sharemarket … as it is doing now. The gold price is up a phenomenal 50 per cent this year.
A sign?
Gold traditionally outperforms during times of financial uncertainty. During and after the Global Financial Crisis, which began in 2007 and continued through to 2010 with uncertainty lingering for a few years after, this was evident in the price of the metal.
I was a cadet business reporter on The Australian newspaper when gold dropped 14 per cent overnight in 1983 and since then I get more than a little nervous when gold has a big run up, because I can remember the big crashes which inevitably follow.
Photos this week of people queueing in the street waiting to get into gold bullion stores worried me
Source: Bloomberg
Like previous surges in the gold price, this one is driven by heightened uncertainty surrounding President Trump’s economic and financial policies – including tariffs, government shutdowns, challenges to the Federal Reserve, and more.
At the same time, central banks have been shifting away from stockpiling US dollars as a store of value, turning instead to gold bullion. Over the past year, they’ve added more than 400 tonnes of gold to their reserves.
Meanwhile, in Australia
For Australia, as one of the biggest gold miners in the world, gold has jumped to become our second biggest export commodity on the back of its price.
While our gold miners sell it in US dollars, their costs are in Australian dollars – so they are reaping the benefit of the currency difference.
Make your own call on how long this gold boom will last, but there’s no denying it was a hot topic among analysts on the the ausbiz business and finance streaming network this week.
The experts weigh in
A major focus of the discussion was spotting listed gold miners and explorers that haven’t yet caught up with the price surge seen by their competitors.
Jonathan Tacadena of MPC Markets pointed to Gorilla Gold Mines (ASX:GG8) as a standout opportunity, citing its strong management, active drilling programs in Western Australia, and a recent capital raise at $0.38 per share. Its current market cap sits between $250 million and $300 million, with Tacadena anticipating a potential upgrade to resources before the year’s end as the next major catalyst. Tacadena views Gorilla Gold Mines as one of the few remaining gold stocks yet to enjoy a full run up in value, estimating upside potential towards the recent high of $0.60 per share and a possible market cap of $400 million to $500 million.
Giuliano Sala Tenna from Bell Potter sees gold as a popular hedge amid ongoing geopolitical uncertainty, interest rate cuts, and persistent US fiscal deficits. Despite the recent rally, Sala Tenna suggests gold may consolidate at current levels before moving higher. He emphasised that many stocks, including Genesis Minerals (ASX:GMD) and Capricorn Metals (ASX:CMM), are not yet pricing in the elevated gold price, presenting a potential upside if bullion remains strong.
Grady Wulff from Bell Direct highlighted Northern Star Resources (ASX:NST) as a top pick, giving it a ‘buy’ rating with a price target of $30. Wulff sees Northern Star as well positioned due to its leading operations, diversified asset base, strong forecasted production growth and a robust balance sheet of $1.5 billion in cash and bullion.
Pantoro Gold (ASX:PNR) is rated a ‘hold’, having upgraded from a ‘sell’ previously due to valuation adjustments and significant financial turnaround. Wulff pointed to a jump in net profit to $66 million in FY25 and improved margins, expecting further enhancement in FY26. The company’s balance sheet remains strong with $176 million in cash and minimal hedging, although higher depreciation costs are forecast to impact earnings.
