Jupiter: A stealth bull market for gold, silver and miners

Ned Naylor-Leyland, Investment Manager, Gold & Silver

The price of gold has risen sharply in the last year, showing off its characteristics as both a portfolio diversifier and safe-haven asset. The price of gold in dollars adjusted for Inflation recently broke out of a 43-year bear market.

We will discuss some of the reasons behind this but it’s important to note first that most of gold’s advance has been driven by hedge funds and speculative traders in the futures market. Long-only ETF (exchange traded fund) investors haven’t participated in the rally, and we expect they will eventually join in and bring additional flow to the overall gold market, both in terms of the physical metal and mining equities.

Silver supply squeeze?

Silver, like gold, is a monetary metal traded on foreign exchange markets. Silver also is widely used in industry, including battery and green technology, and it is in short supply – facing a possible supply squeeze in the next few years.

Silver has been rising in price but at the time of writing, it remains well below its all-time high priced in dollars of $50/ounce. Like gold, the silver market also is currently lacking in demand from long-only investors.

This lack of participation by mainstream investors in the gold and silver markets is illustrated by the total known ETF holdings of these metals, which are currently well below the peak levels reached in 2020 (gold) and 2021 (silver). The chart below shows this for gold.

Gold in dollars is in a "stealth’’  bull market

The gold price in dollars has surged while the physical gold ETF tonnage (blue line) is 25% below the 2020 peak. The SPDR Gold Trust has shed 100 tonnes in the last year

 Source: Bloomberg, as at 22 April 2025. Past performance is no indication of current or future performance.

Another part of the monetary metal market that we invest in is gold and silver miners. When metal prices rise, so does the profitability of miners. Gold and silver miners are currently generating high margins, paying dividends and special dividends, and are in a merger and acquisition phase.

Undervalued miners

Yet, as with gold and silver, the valuation of mining shares doesn’t reflect what we believe to be their upside potential. These companies are doing extremely well at the operating level and yet remain mostly ignored by long-only investors.

Both silver and gold and silver miners tend to be "beta’’ plays, more volatile than gold, and they tend to rise a little later in the cycle than gold.

Where are the long-only investors? We believe it’s a matter of time before asset allocators recover from the shock of the extreme market volatility in Q1 and early Q2, move off the sidelines and recognise that investing in gold, silver and precious metal miners makes sense.

This is exactly what the world’s most important central banks have been doing. Gold is a principal reserve asset of central banks, which use the yellow metal to protect against inflation and market risk. These institutions have been increasing their holdings over the last three years, according to the World Gold Council¹.

Our strategy has had bullish positioning for more than a year.  We think it makes sense to seek to achieve additional returns with higher weighting toward silver and miners versus gold.

What is behind the bull market in gold, and is it all about the Trump administration’s tariffs? In our view, there is something much bigger in play. We are seeing the end of globalisation, the end of the petrodollar system, i.e. the dollar-based global energy market which has been in place since 1971. We appear to be witnessing the end of a long cycle of US hegemony and primacy of the dollar and US Treasuries as the premier risk-free assets in the global financial system.

Dollar vs gold

The dollar is now in a structural bear market versus gold. This reflects a change in the market’s view about what assets are truly risk free and what assets will be used to clear international trade imbalances over the next 10, 20 or 30 years. I think it will be gold – we will return to the historical norm – and not dollars or US Treasuries.

The Trump administration appears to want to rebuild and onshore manufacturing capacity and to walk back from the US’s traditional role as a global police force. There is a growing understanding that the rate at which the US government debt is ballooning is not sustainable. It’s expensive to provide a global police force, though also very profitable for US companies. The Trump administration’s government reboot has significant implications for financial markets.

If you ask me whether dollars will buy you less stuff in next 2 or 3 years than they do now, my answer is, yes, absolutely. We often say there is "no gold price’’ because gold is gold – an accounting tool that shows you what’s happening to your local currency. The gold price in dollars has blasted through an all-time, inflation-adjusted high, and this changes everything, in our view.

Gold is real money, it can’t be printed by governments and central banks, while silver and the precious metal miners are gold’s "higher beta’’ cousins. We think that gold, silver and gold and silver mining equities have a significant role to play in a well-diversified investment portfolio, especially in the current market and in a macroeconomic environment that is undergoing profound and far-reaching changes.

Sources

¹World Gold Council, 3 April 2025; https://www.gold.org/goldhub/gold-focus/2025/04/central-banks-keep-gold-focus-february

Strategy specific risks

• Currency (FX) Risk - The Strategy can be exposed to different currencies and movements in foreign exchange rates can cause the value of investments to fall as well as rise.
• Share Class Hedging Risk - The share class hedging process can cause the value of investments to fall due to market movements, rebalancing considerations and, in extreme circumstances, default by the counterparty providing the hedging contract.
• Pricing Risk - Price movements in financial assets mean the value of assets can fall as well as rise, with this risk typically amplified in more volatile market conditions.
• Commodity prices - the Strategy's investments are concentrated in natural resource companies, and may be subject to a greater degree of risk and volatility than a strategy following a more diversified strategy. Silver tends to outperform gold in a rising gold price environment and it tends to underperform gold when sentiment moves against the sector.
• Market Concentration Risk (Geographical Region/Country) - Investing in a particular country or geographic region can cause the value of this investment to rise or fall more relative to investments whose focus is spread more globally in nature.
• Market Concentration Risk (Sector) - Investing in a particular sector can cause the value of this investment to rise or fall more relative to investments whose focus is spread more evenly across sectors.
• Derivative risk - the Strategy may use derivatives to generate returns and/or to reduce costs and the overall risk of the Strategy. Using derivatives can involve a higher level of risk. A small movement in the price of an underlying investment may result in a disproportionately large movement in the price of the derivative investment.
• Liquidity Risk - Some investments may be hard to value or sell at a desired time and price. In extreme circumstances this may affect the Strategy's ability to meet redemption requests upon demand.
• Liquidity Risk (general) - During difficult market conditions there may not be enough investors to buy and sell certain investments. This may have an impact on the value of the Strategy.
• Counterparty Default Risk - The risk of losses due to the default of a counterparty on a derivatives contract or a custodian that is safeguarding the Strategy's assets.
• Smaller Companies - The Strategy invests in smaller companies, which can be less liquid than investments in larger companies and can have fewer resources than larger companies to cope with unexpected adverse events. In less favourable market conditions these companies may therefore under-perform larger companies and the Strategy may under-perform strategies that invest predominantly in larger companies

The value of active minds: independent thinking

A key feature of Jupiter’s investment approach is that we eschew the adoption of a house view, instead preferring to allow our specialist fund managers to formulate their own opinions on their asset class. As a result, it should be noted that any views expressed – including on matters relating to environmental, social and governance considerations – are those of the author(s), and may differ from views held by other Jupiter investment professionals.

Important information

This document is intended for investment professionals and is not for the use or benefit of other persons. This document is for informational purposes only and is not investment advice. Market and exchange rate movements can cause the value of an investment to fall as well as rise, and you may get back less than originally invested. The views expressed are those of the individuals mentioned at the time of writing, are not necessarily those of Jupiter as a whole, and may be subject to change. This is particularly true during periods of rapidly changing market circumstances. Every effort is made to ensure the accuracy of the information, but no assurance or warranties are given. Issued in the UK by Jupiter Asset Management Limited (JAM), registered address: The Zig Zag Building, 70 Victoria Street, London, SW1E 6SQ is authorised and regulated by the Financial Conduct Authority. Issued in the EU by Jupiter Asset Management International S.A. (JAMI), registered address: 5, Rue Heienhaff, Senningerberg L-1736, Luxembourg which is authorised and regulated by the Commission de Surveillance du Secteur Financier. No part of this document may be reproduced in any manner without the prior permission of JAM/JAMI.