Gold mining

stocks are outstripping leading

artificial intelligence

companies and bitcoin, as a bull run in precious metals fuels an even stronger rally for the “unloved” companies that dig them from the ground.

The S&P Global Gold Mining index has surged 126 per cent this year, the best performer among the S&P sector indices.

The upswing in an industry sometimes dismissed as value destructive is set to deliver bumper profits for the likes of

Agnico Eagle Mines Ltd.

, Barrick Mining Corp. and

Newmont Corp.

, which have benefited from a 52 per cent surge in the price of the precious metal since the start of January.

“It’s been a very good year for gold stocks,” said Imaru Casanova, portfolio manager at investment firm VanEck. “They have more cash than they know what to do with.”

But the outperformance has sparked questions about whether the industry can maintain its financial discipline, with the sector still haunted by memories of the gold rush that followed the global financial crisis — and the crash that followed.

Then, as bullion prices surged, an influx of profits fed a burst of corporate dealmaking, a jump in executive remuneration and a rise in production costs. The reckoning was brutal: from the peak in 2011, gold stocks plunged 79 per cent over the next four years.

“A lot of value was destroyed,” Casanova said. “In investors’ minds, it’s still fresh. The mistakes these companies made in the previous cycle, and some scepticism, will those mistakes happen again?”

Gold

soared past US$4,000

per troy ounce this week, as a U.S. government shutdown stoked a rally already fuelled by prolonged central bank buying, and investor concerns over ballooning sovereign debt.

Gold stocks have outperformed the underlying commodity because, with day-to-day production costs largely fixed, a higher price can translate into pure profit.

Agnico Eagle is up 113 per cent this year, Barrick has risen 114 per cent and Newmont has gained 134 per cent. Zijin Gold shares have doubled since the company went public on Sept. 30 in the year’s second-biggest

initial public offering.

By comparison, Nvidia Corp. has added 40 per cent,

Oracle Corp.

is up 72 per cent, Google owner

Alphabet Inc.

has put on 30 per cent and there has been a 25 per cent increase at Microsoft Corp. Bitcoin has risen 31 per cent.

But gold industry money managers worry about a return to past excesses, and are asking companies to stay focused.

“At the moment they’re behaving well,” said Keith Watson, co-fund manager at investment trust Golden Prospect. “It’s kind of a ‘show me’ story — people will believe it when they see it. And hopefully that will lead to them regaining some faith from broader markets.”

George Cheveley, gold mining fund portfolio manager at asset manager Ninety One, noted how a sector that had long felt “unloved” tended to “make money in short bursts” due to its cyclical nature.

“Because they make it so quickly, it does get excessive,” he said. “It will be wildly profitable, initially,” he said of gold miners. “Some people will stick to their discipline, and some won’t.”

Pressure to improve returns is being felt in the boardroom, with Newmont and Barrick both announcing new chief executives last week.

Barrick’s surprise move to replace Mark Bristow was likely “related to stock underperformance versus peers”, said Matthew Murphy, analyst at BMO Capital Markets.

Corporate leaders must now decide how best to allocate an expected flood of capital, with BMO predicting sector free cash flow of US$60 billion next year.

Evy Hambro, head of thematic and sector investing at BlackRock, said “returning capital to long-suffering shareholders should be a key priority for gold mining companies, given the robust margins they are finally enjoying”.

He wants companies to prioritize dividend payments over other methods such as share buybacks. “Even better would be to give shareholders the choice to receive payments in the form of a gold-backed

ETF [exchange traded fund]

, rather than just dollars or other currencies,” he added.

Yet the lure of M&A deals may be hard to resist.

The scarcity of new gold mines could drive consolidation, as producers try to replace the reserves they continuously lose by extraction.

Though share prices are high, all-share transactions such as the recent merger deal between Anglo American PLC and Teck Resources Ltd. may be a model for dealmaking, analysts say.

Another shareholder concern is that gold mining bosses, already better paid than other mining chief executives, could seek to hoover up some of the cash themselves, as they have in the past.

Marcelo Kim, a partner at Paulson & Co, caused a stir in 2017 when he lambasted gold miners for the excessive sums they paid their corporate leaders, saying investors behaved like “sheep being led to the slaughter” when approving executive packages.

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Kim, who is still at Paulson and chair of gold miner Perpetua Resources, acknowledged greater discipline this time around but warned against excess. “I would hope no one gets crazy pay packages just because gold prices are up, because they have nothing to do with that,” he said.

But, he added: “If they do the right things, they should just make a boatload of money.”

© 2025 The Financial Times Ltd