Inflation and geopolitical pressures have spurred a "new safe haven logic", with shares of gold miners outperforming the price of gold.

Notice that due to inflation and political risks from GEO Group Inc, analysts have raised their expectations for gold, a classic safe-haven asset, and the stock prices of gold miners surged at the beginning of 2025. The $14 billion VanEck Gold Mining ETF has risen by approximately 20% this year, with all but four of its 56 stocks rising. In comparison, gold prices have increased by 12%, while the Standard & Poor's 500 Index has only risen by about 1.7%. This dynamic indicates a change from the trend in recent years where mining stocks typically lag behind the price of gold. One factor driving the strong performance of gold could be investors seeking other ways to benefit from the continued rise in gold. Gold is a popular hedge against inflation and political turmoil, reaching historic highs on Monday. Steven Schoffstall, the ETF product management director at Sprott Asset Management, said "Gold stocks have not performed well from 2014 until now. We do believe that gold and silver will continue to rise." Some individual stocks have outperformed this ETF: the world's largest gold producer, Newmont Mining (NEM.US), saw its stock price rise by 18%, making it the best-performing stock in the Materials sector of the S&P 500 Index so far in 2025. Canadian company SSR Mining Inc. rose by about 50%, with precious metal stocks making up most of the best-performing stocks on the Toronto Stock Exchange Composite Index. Goldman Sachs Group, Inc. strategists last week raised their gold target price to $3,100, about 5% higher than the current level, citing large-scale gold purchases by central banks worldwide. This includes the People's Bank of China, which has increased its gold reserves for the third consecutive month in January. Since the Russia-Ukraine conflict erupted, gold purchases by central banks around the world have nearly doubled. J.P. Morgan analyst Bill Petersen wrote earlier this month that U.S. President Trump's tariffs on Canada, Mexico, and China reinforced the bullish view on gold at the bank, as a trade war could cause disruptions. Fund managers surveyed by Bank of America Corp. expect that by 2025, gold will be the second-best performing asset after international stocks. With concerns that tariffs could lead to price increases, long-term inflation expectations among U.S. consumers have reached their highest level in nearly three decades. New ETFs gaining popularity As investors seek more investment options, interest in gold-related stocks is fueling the launch of new exchange-traded funds. Sprott Asset Management LP, based in Toronto, last week launched an actively managed gold and silver mining ETF, which has seen a sharp increase in retail traders. Previously, the company launched a passively managed silver mining ETF in January. However, if U.S. inflation shows signs of cooling, demand for gold may be affected, weakening the potential for hedging against price increases. A ceasefire in Ukraine or less severe U.S. tariffs than expected could also put pressure on gold prices. Nevertheless, supporters of gold and silver stocks point out that despite recent gains, many stocks are still relatively cheap compared to the overall market. The price-to-earnings ratio of North America's largest gold miner, Newmont Mining, is around 13 times, while competitor Barrick Gold Corporation(GOLD.US) has a P/E ratio of 8.8 times. Both companies' P/E ratios are much lower than the average of 27 times for the S&P 500 Index. Schoffstall said, "Most investors can benefit from physical gold or precious metal stocks - the industry's proportion in the portfolio is still insufficient."