Market Update 8th September 2025
Gold Digger
Last week saw a number of geopolitical tensions rise, from the SCO Summit in China to the US gathering naval ships off the coast of Venezuela, and an honourable mention to the UK’s deputy PM stepping down. All in a week’s work. Markets didn’t move much on the back of any of these, I think honestly markets have a perma-crisis mindset now. However, defensive assets have been doing very well on the back of the noisy year.
I wrote back in June about the different ways to gain exposure to gold. I thought it was worth bringing up again since its price reached a new all time high on Friday at $3,606/oz. The last all time high was on 22nd April at S $3,500.05/oz. JPM predicted it would reach a peak of $4,000/oz by Q2 2026 and I recently read a different report by WisdomTree which predicted a $3,850/oz by Q2 2026. Either way higher than current prices.
Gold has been doing well for the past few years. It has gone up 40% in 12 months and 77% in the last 3 years. As you can see it’s been a continuous physical gold rally for the last few years and it has been a good diversifier in portfolios. On the other hand, gold miners have lagged this rally, until recently.
Gold miners do tend to lag the gold price so this isn’t a surprise as demand dynamics catch up. In 2024 the gold price went up by 29%, compared to the VanEck Gold Miners ETF which only went up 9.4%. YTD (as at 5th September) the gold price has gone up 30% YTD, and the VanEck Gold Miners ETF has gone up 95.2%.
We have a gold and silver fund which can and does buy bullion also but has been about 70% in miners this year and that has gone up 83.4% YTD, as at 5th September. I will also mention silver where bullion has increased 30% YTD and the Global X Silver Miners ETF has gone up nearly 99%. In 2024 the miner ETF delivered 14.6% and bullion delivered 23%.
Miners are inherently more volatile than owning bullion. The last gold miners rally in 2020, going up 91% from March to July then had the ETF declining 21% within the next 6 months. As you would expect gold and silver miners have high correlations to each other, but both display low correlations to for example the S&P and the MSCI ACWI across all time horizons despite being equities. This can be beneficial for diversification within a portfolio.
However, I did talk about central banks increasing reserves over the past few years helping the gold price in the sustained rally. With volatile geopolitics I believe this trend will continue. The World Gold Council conducted its annual survey and 95% of respondents also believe that central bank gold reserves will increase over the next 12 months.
One thing in the survey which I hadn’t appreciated was that the Bank of England is the most popular vaulting location for gold reserves amongst respondents, about 64%. London Good Delivery bars being the most popular choice for reserves. The use of the Bank of England comes from a safety and security perspective but also a liquidity and trading point of view too. Most respondents from the survey also said they have no plans to change the custodian arrangements. A new trend though is that “a significantly higher percentage of respondents reported some domestic storage of gold reserves this year than they did last year (59% in 2025 vs 41% in 2024).” And some saying if purchasing more reserve gold, they might store it domestically. This is an interesting shift.
A lot can happen in a week.
Emily Cave – Research Analyst
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