Riding the Gold Wave: Record Prices, Strategic Mergers and Miners' Resilience
17 April 2025
Read Time 7 MIN
Monthly gold market and economic insights from Imaru Casanova, Portfolio Manager, featuring her unique views on mining and gold’s portfolio benefits.
Equity Turbulence Boosts Gold’s Shine
U.S. equity markets experienced significant declines during the month of March. Driven by concerns over new tariff implementations and their potential impact on the global economy, the S&P entered correction territory on 13 March, after dropping more than 10% from their February 19 peak. The unpredictability of economic policies and heightened market volatility bolstered gold's appeal, reaffirming its role as the preferred safe-haven asset during times of global uncertainty. The spot gold price recorded new all-time highs during the month, surpassing the $3,000 per ounce mark on 14 March and closing at a record price of $3123.57 on March 31, a 9.30% ($265.73) monthly gain. As of 31 March, gold prices have risen by 93.61% over the past five years1 – nevertheless, investors should keep in mind that past performance is not representative of future results. Investors should be aware of the risks associated with investing in gold, such as market volatility, the potential for price declines and currency fluctuations.
Gold Miners Outperform Amid Market Weakness
The gold miners, as represented by the NYSE Arca Gold Miners Index (GDMNTR), outperformed significantly (up 15.51% during the month)2, showcasing not only their leverage to the gold price, but also their attractive valuations relative to the broader equity markets, and their role as an effective portfolio diversifier due to their low correlation with most other asset classes. The S&P 500 ended the month down 5.63%3.
Investment Demand Signals Sentiment Shift
The contrasting performances highlight a shift in investor sentiment towards gold and related equities. Increasing investment demand for gold translated into another month of strong inflows for the gold bullion backed ETFs, with holdings up 2.82% during the month4. More importantly, according to LSEG Lipper data, this surge in investor interest in the gold sector led to the largest monthly net inflows in more than a year for funds that invest in gold miners, reversing a trend of persistent net outflows over the last couple of years. Funds investing in physical gold and gold derivatives attracted net $17.8 billion in 2024, the highest in five years, while funds investing in gold miners lost net $4.6 billion, the most in a decade.
Chasing the Vein: Fund Flows into Gold Miners
Source: Mining.com. Data as of 21 March 2025. Note—data covers 493 funds with combined assets under management of $62 billion.
Surging gold prices are driving record cash flow for gold producers, and when paired with rising stock valuations, are creating a more favorable climate for mergers and acquisitions (M&A) within the sector. Gold miners led the way in metals and mining M&A in 2024, according to research from S&P Global Market Intelligence5, which revealed that gold deals made up 70% of the total transaction value. The report highlighted 62 gold-focused transactions during the year—representing a 32% increase from 47 deals in 2023.
M&A Momentum: Gold Sector Takes the Lead
We believe one of the key factors supporting a re-rating of the gold equity sector is a balanced approach to capital allocation. Investors’ desire for dividends and share buybacks must be satisfied, but to remain competitive and attract business, companies must deliver growth. That growth doesn’t necessarily have to be annual production growth, to be clear. Growth can be achieved organically—through the drill bit, optimizations, efficiencies and expansions—and is certainly our preferred approach. However, growth can also be acquired through M&A. While not as economically attractive as organic growth, it remains an important—if not essential— component of any mid-tier or large gold producer’s growth strategy.
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1 Source: World Gold Council, ICE Data Services, FactSet Research Systems Inc.
2 Source: Financial Times.
3 Source: Financial Times.
4 Source: World Gold Council.
5 Source: S&P Global.
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