Australian gold funds are gearing up for a promising year, with mining companies positioning themselves to capitalize on record gold prices. This resurgence is allowing stocks to finally align with the performance of the precious metal.
In 2024, portfolio managers faced frustration as rising production costs prevented ASX-listed gold producers from fully benefiting from a surge in spot gold prices. The VanEck Gold Miners exchange-traded fund (ETF) saw a nearly 20 percent increase, though this lagged behind a 38 percent rally in gold prices in Australian dollars. The gold price itself set new records 40 times in 2024 and continues to show strength into the new year.
However, with easing cost inflation in the mining sector—after three years of pressure—and ongoing price increases, the trend has shifted. VanEck’s Gold Miners ETF is already up 17 percent this year, while the Australian dollar gold price has climbed by 6.3 percent.
Local fund managers are optimistic, believing the gold rally has further room to grow. The US dollar price of gold recently surpassed $US2942 per ounce, and the Australian dollar price has breached $4500. Cameron Judd, portfolio manager at Victor Smorgon Partners, reports that their Resource Gold Fund posted a 13.3 percent return in January. He believes the valuations of ASX gold stocks have not yet fully reflected the positive outlook for gold.
“Gold’s performance in times of uncertainty or crisis could see it push towards $US3600,” Judd said. “Despite the strong gold price performance and supportive fundamentals, gold miners on the ASX remain undervalued.”
Wall Street’s largest banks predict that gold’s price could soon top $US3000. Citi forecasts this milestone within the next three months, while JPMorgan sets a year-end target of $US3150. Bank of America has raised its forecast to $US3500 per ounce if investment demand increases by 10 percent this year.
The unprecedented surge in gold prices has been driven by investors flocking to safe-haven assets amid growing concerns over global inflation and the potential economic fallout from US President Donald Trump’s aggressive trade and geopolitical policies. These fears have led to expectations of higher central bank interest rates, which could damage global economic growth.
Victor Smorgon Partners’ top holdings include ASX-listed Vault Minerals, US-based Newmont (the world’s largest gold miner, which recently acquired Newcrest), and Northern Star, Australia’s largest gold miner, which is set to acquire De Grey in a $5 billion deal.
Judd also anticipates further acquisitions of local miners by international companies, driven by the attractive valuations of ASX-listed gold stocks, aided by a weaker Australian dollar. “The lower Australian dollar makes gold miners even cheaper to buy as demand for the precious metal rises,” he explained.
Collins St Asset Management, which took a stake in a range of gold miners nearly two years ago through its flagship value fund, is now reaping the benefits of the sector’s catch-up. Founder Michael Goldberg sees the potential for significant returns and launched a special situations fund in March 2023, exclusively focused on gold stocks.
“The opportunity in gold is so large that we’ve seen strong returns in our Collins St Special Situation Fund,” Goldberg said. The fund surged 13 percent in January and has gained an additional 9 percent in February.
Goldberg is confident that 2025 could be the year that gold stocks achieve rapid growth, driven not only by rising gold prices but also by market recognition of the earnings potential of early-stage producers.
Collins St’s focus on small and mid-cap companies—those with lower production costs, unhedged sales books, and significant potential for growth—has positioned them to benefit from the gold sector’s upward trajectory. The fund’s portfolio includes companies like Catalyst Metals, Black Cat, Westgold Resources, and Ramelius Resources.
Meanwhile, Argonaut’s Global Gold Fund is also rebounding after a disappointing 2024, where it posted a modest 4.5 percent return. In January 2025, the fund rebounded with an 8.8 percent return. Its portfolio includes top holdings such as Perseus Mining, Evolution Mining, Ora Banda, Ramelius Resources, and Ora Gold, which together represent 55 percent of the portfolio.
With the gold sector showing clear signs of resurgence, Australian gold funds appear poised for a strong performance in 2025.
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