Why You Should Buy Gold Mining ETFs Now
Gold continues to be one of the standout performers of 2025, outperforming the S&P 500. SPDR Gold Trust GLD gained 27% versus 8% gains in SPDR S&P 500 ETF Trust SPY. In an environment marked with global instability, geopolitical tensions, and persistent skepticism around fiat currencies, investors are flocking to gold as a reliable safe-haven asset. All signs suggest that this momentum is far from over.Drivers of Gold’s StrengthGold’s recent resilience has been underpinned by both long-term structural shifts and shorter-term cyclical pressures. One key driver has been surging central bank demand, especially from BRICS nations and emerging economies that are actively working to diversify away from the U.S. dollar. This global de-dollarization trend has resulted in record levels of sovereign gold purchases.Geopolitical Risk Keeps the Bid StrongAdding further support is the escalating global uncertainty. The re-election of Donald Trump as the U.S. President has rekindled volatility around U.S. trade, alliances, and central bank policy. Against this backdrop, gold is increasingly sought as a hedge against policy errors and monetary instability.Tensions across the globe continue to rise — whether it’s the Russia-Ukraine war, growing strains between the United States and China, particularly over Taiwan and semiconductors, or renewed unrest in the Middle East. These geopolitical tensions are driving more investors toward safe-haven gold as a defensive allocation.Record-Breaking Margins Expected for Gold Miners in Q2Gold producers are likely to report record profit margins this earnings season, according to analysts at Stifel Financial Corp., as quoted on Kitco.com. In their second-quarter earnings preview, the firm forecasts an average all-in sustaining cost (AISC) margin of approximately $1,740 per ounce for senior producers and $1,535 per ounce for mid-tier producers, representing quarterly gains of 28% and 20%, respectively.Gold Miners’ Cost Pressures Easing Amid Stabilizing InflationDespite facing ongoing cost pressures, mining companies have benefited from a stabilization in inflation. Stifel noted that unit cost inflation has largely settled within a 5-10% range year-over-year. A notable relief came from declining fuel prices, thanks to a quarter-over-quarter drop in WTI crude, which has helped to ease operating costs.Rising Gold Prices Drive Higher ProfitabilityWhile costs have inched higher, they have been outshone by the sharp rally in gold prices, which jumped by over $400 on average during Q2. This surge has led to higher profitability and is setting the stage for record-breaking margins across the sector.Free Cash Flow Likely to ImpressAlong with soaring margins, Stifel expects strong free cash flow (FCF) generation from both senior and intermediate gold producers. The firm projects FCF yields for senior miners to hit 6.2% in 2025 and 6.7% in 2026. Intermediate producers are expected to perform even better, with forecasted FCF yields of 6.3% in 2025 and a robust 10% in 2026. Key drivers include elevated gold prices, better cost control, improved productivity, and the completion of major mine development projects.Further Gold Price Rally Looks Imminent?The 50-day moving average (MA) for Gold Aug '25 is 3344.9 while the 200-day MA is 3,028.2. This indicates a bullish signal. Bottom LineWith favorable macro drivers, rising geopolitical instability, and a bullish technical formation taking shape, gold appears primed for another move higher. The mining sector is in a place to make the most of this rally. For investors looking to capitalize on this trend, gold ETFs, such as GLD, iShares Gold Trust IAU, SPDR Gold Minishares Trust of beneficial interest IAUM, and mining ETFs, such as VanEck Gold Miners ETF GDX,Sprott Junior Gold Miners ETF (SGDJ)andiShares MSCI Global Gold Miners ETF RING, offer attractive entry points. Several gold mining ETFs have hit a 52-week high lately. Want key ETF info delivered straight to your inbox?Zacks’ free Fund Newsletter will brief you on top news and analysis, as well as top-performing ETFs, each week.Get it free >>Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report SPDR Gold Shares (GLD): ETF Research Reports iShares Gold Trust (IAU): ETF Research Reports SPDR S&P 500 ETF (SPY): ETF Research Reports VanEck Gold Miners ETF (GDX): ETF Research Reports iShares MSCI Global Gold Miners ETF (RING): ETF Research ReportsThis article originally published on Zacks Investment Research (zacks.com).Zacks Investment ResearchWeiter zum vollständigen Artikel bei Zacks
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