Weekly Selection: Gold Breaks Records and Outperforms the S&P 500 — Is Silver Next?

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Gold continues to break record after record, both in dollars and euros. Over the past twenty years, the precious metal has even delivered a higher return than the S&P 500. Investors are fleeing en masse to safety. Will silver follow in gold’s footsteps in the coming period? And how are gold mining companies performing amid this gold rally? Read on!

New Gold Records

This week, the gold price once again reached record levels—in both euros and dollars, both nominal and real. Yesterday, at the peak, a kilo of gold cost nearly €94,500, and in dollars, about $3,350 per troy ounce.

Price development of one kilo of gold in euros on April 18 (source: Holland Gold)

Last week, we already reported that capital is seeking safe havens in these historically turbulent times. That remains the main driving force behind the rising gold price this week. Even before this week’s further increases, the Financial Times noted over the weekend: “Gold has its best week in five years as investors seek safety.”

Gold Price & Gold ETFs (source: Holger Zschaepitz)

There is not only high demand for physical gold—capital is also flowing back into gold ETFs. Will Rhind, CEO of ETF provider GraniteShares, told the British financial newspaper that the recent flight to gold is mainly driven by fear. “We are in a very unusual situation where traditional safe havens are not fulfilling their role,” he said, referring to rising yields on U.S. Treasury bonds. “You’re seeing yields rise in a climate where investors are nervous about the market—that breaks the cycle of trust.”

Jesper Koll of consulting firm Monex Group told the BBC that investors have fled en masse to gold as a hedge of confidence against both inflation and reckless government policy. “Everyone is looking for ‘real’ assets. It’s becoming increasingly clear that the ‘move fast and break things’ policy of Team Trump is not going to change.”

Gold vs. S&P 500 return over the past 20 years (source: Barchart)

Over the past 20 years, gold has now delivered a higher return than the S&P 500—even when accounting for dividends. Some commentators, such as investor Frank Giustra, find it strikingly quiet in the mainstream media, including Bloomberg, considering the historic scale of the gold rally. He wrote on X: “As I’ve said for years: mentioning gold goes against the prevailing narrative that everything is fine with the financial and monetary system.”

After reaching the record high, we saw a slight dip in the gold price yesterday. It's not uncommon for a correction to occur after a strong rise. This may be due to profit-taking or to positive signals from U.S. President Trump regarding trade negotiations with Japan and Mexico. At the same time, several banks have raised their gold price forecasts in recent days. UBS increased its target from $3,000 to $3,500 per troy ounce within the next 12 months. “We expect additional demand from central banks, institutions, and investors in response to recent events.”

Yesterday, Citi Research followed suit, also forecasting $3,500 per troy ounce, but within three months. The trigger: fresh demand for gold from Chinese insurers and a spike in safe haven flows. “We believe the gold market is likely in an extremely rare physical shortfall. This means prices must rise to incentivize holders to sell, allowing the market to rebalance.”

Gold Mining Companies

Gold mining companies are also benefiting from the high gold price. The price of the VanEck Gold Miners ETF (GDX) is at its highest level in years. Yet investor interest in gold mining stocks appears limited. The number of outstanding GDX shares hit a five-year low this week. Investors do not yet seem fully convinced of the appeal of gold miners.

VanEck Gold Miners ETF (source: Nasdaq)

Investing in gold mining stocks carries more risk than investing in physical gold. Physical gold has no counterparty risk, whereas gold mining shares face numerous risks. In addition to operational risks, there are various political risks for gold producers. As we previously reported, Tanzania nationalized 20 percent of the country's gold production. And in November, the CEO of an Australian gold mining company was arrested by the government in Mali.

This week, several French media outlets reported that tensions in Mali remain high. Le Figaro wrote that the military regimes—which have overthrown governments in Mali, Burkina Faso, and Niger since 2020—are further pressuring foreign, especially Western, mining companies. On Tuesday, Malian authorities shut down the offices of Canadian mining company Barrick Gold in Bamako for “failing to pay taxes.” Under the banner of economic sovereignty, Mali reformed its mining laws in 2024 and is demanding hundreds of millions of dollars in back taxes from Barrick Gold. The military junta had already blocked the company from exporting gold from the site and is now threatening to seize its assets in the country. Ghana also took similar steps this week, imposing a ban on foreign participation in the local gold trade to boost state revenues and gain more control over the gold sector.

Is Silver About to Break Out?

“As gold continues to perform strongly, it’s worth keeping an eye on silver,” writes Ole S. Hansen of Saxo Bank. He notes that silver is currently relatively cheap, with a gold-silver ratio hovering around 100—well above the three-year average of around 85.

Gold-Silver Ratio over the past five years (source: Holland Gold)

ZeroHedge reports that silver often lags behind gold but tends to catch up eventually—often with abrupt, sharp price movements. Demand for silver certainly appears to be growing. The Silver Institute reports that industrial demand for silver rose 4% in 2024 to a record 680.5 million ounces (Moz). This marks the fourth consecutive year of growth.

Global demand for silver exceeded supply for the fourth year in a row, resulting in a structural market deficit of 148.9 Moz. Although silver demand is expected to decline slightly in 2025 while supply increases, a market deficit of 117.6 Moz will likely remain. Will the silver price follow gold’s upward trend? To be continued!