Going for Gold: Why Gold Still Shines in 2025

• Gold has soared past $3,000/oz, fueled by inflation fears, geopolitical uncertainty, and central banks stocking up to reduce reliance on the US dollar.
  
  
• Mining stocks are seeing massive profit surges. AngloGold Ashanti’s EBITDA jumped 93%, while DRDGOLD saw a 74% profit increase, thanks to soaring gold prices.
  
  
• Whether through physical gold, ETFs, or mining stocks, investors have multiple ways to ride the gold wave. EasyETFs Balanced AMETF is positioned with exposure to major JSE-listed gold miners.
  

Gold has always been the go-to safe haven, but with prices hitting record highs of (over $3,000/oz) its appeal is stronger than ever. Whether you're a seasoned investor or just dipping your toes in, understanding gold's role in today's market is crucial. Let's break it down.

The Gold Rush: Why Investors Are Flocking to Gold
Gold isn't just a shiny metal; it's a store of value that can sidestep currency fluctuations, government control and hedge against inflation. With rising geopolitical tensions and growing distrust in fiat currencies, investors and central banks are stocking up. Strong central bank purchasing, especially in emerging markets, may signal a shift away from the dollar-dominated system.

Source: World Gold Council

With global conflicts, instability and inflation, investors are no longer just seeking returns, they want security too. While Bitcoin may be seen by some as an alternative, many institutional investors and central banks prefer gold due to its long history as a stable store of value, its lack of regulatory uncertainty, and its universal acceptance in financial markets. And gold delivers.

Date taken on 19/03/2025

1. Physical gold (such as Krugerrands, bullion, or coins)
2. Gold ETFs
3. Gold mining stocks like AngloGold Ashanti, Harmony Gold, Gold Fields etc. While mining stocks offer potential leverage on rising gold prices, they also carry operational risks.
   

Case in point: AngloGold Ashanti saw a 93% jump in EBITDA when its average gold price received rose 24%. DRDGOLD, with flat production, still raked in a 74% increase operating profit thanks to higher gold prices.

But there’s a flip side. If costs spike or production stalls, gains can evaporate. Pan African Resources only saw a 10% profit increase despite higher gold prices, thanks to soaring costs and operational hiccups. In mining, efficiency and cost control make all the difference.

When evaluating gold miners, one of the key metrics to consider is the All-In Sustaining Cost (AISC) per ounce. AISC represents the total cost of mining and sustaining production, including direct mining costs, labor, equipment, energy, capital expenditures, and corporate overhead. It provides a more accurate picture of a miner’s profitability than just looking at spot gold prices.

The lower a company's AISC, the wider the profit margin when gold prices rise. For example, if a miner's AISC is $1,500 per ounce and they sell gold at $2,000 per ounce, they earn a $500 per ounce margin before other costs. However, if AISC is too high relative to gold prices, a company may struggle to remain profitable. Investors must assess AISC alongside the average gold price received to determine which miners are best positioned for long-term gains.

The data below is based on the latest full-year reports from each company, but reporting periods vary. Some miners may have more recent interim results that could impact these figures.

Top South African Gold Miners in 2025 (Key Stats)

While these financial indicators are crucial, investors must also consider other costs not included in the (AISC) and other risks that impact mining operations and long-term profitability. These include the quality of ore mined, as higher-grade deposits generally lead to lower extraction costs and better margins. Mine location and geopolitical factors can pose challenges, such as government regulations, taxation policies, and social unrest, which may disrupt production or increase costs.

Currency fluctuations also play a role, since gold is priced in US dollars, miners operating in countries with weaker local currencies may experience cost advantages, while those in stronger-currency regions may face cost pressures. Additionally, factors like operational efficiency, labour relations, and environmental sustainability requirements can influence a company’s ability to maintain profitability over time.

EasyAssetManagement has significant allocations towards JSE listed gold miners in our EasyETFs Balanced AMETF with positions in all the above-mentioned minors.

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