All that glitters is not gold

By Manpreet Gill, Chief Investment Officer for Africa, Middle East and Europe

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Wealth BuildingForex, Gold & Alternative InvestmentsInvestment StrategiesStocks, ETFs & TradingUnit Trusts & Mutual Funds

8 October 2025  I  4 mins read

Precious metals have had an incredible run over the past few years. Since the start of 2022, gold has delivered well over 100% returns, a remarkable outcome when global stocks delivered approximately 40% over the same period. We remain bullish on gold given the now well-known demand from major central banks for diversification.

However, the rally in gold is increasingly spawning a rally in several related assets – other precious metals, such as silver, and equity sectors, such as gold miners whose revenues are linked to gold prices. Is it time to broaden exposure to precious metals? We think so, in specific cases, but investors should be careful to avoid excessive concentration.

Gold bull market set to continue

The bull case for gold is now well-known. My colleague Raymond Cheng recently wrote a piece arguing the precious metal was on pace to rise towards USD 4000, a view that is now tantalisingly close to being borne out. We continue to like gold mainly because of our view that central bank reserve diversification demand has further to run. Indeed, we recently upgraded the metal to Overweight within our multi-asset portfolios. Gold also holds the additional benefit of being a hedge against several near-term risks – the risk of higher inflation, the risk of short-term equity and bond market volatility and the risk of US Dollar weakness.

Silver as an alternative?

In 2025, gains in silver have started to surpass those in gold. This raises the interesting question of whether silver can act as a substitute for gold and hold the potential for higher returns in an ongoing rally.

We would be extremely careful about such simplistic extrapolation. One key difference with gold is that silver is also sensitive to industrial demand. This means it is likely to do well in a pro-growth environment, but not so well if growth falters. A second key difference is that, based on publicly available data at least, there does not appear to be significant central bank reserve diversification demand for silver, at least anywhere close to that for gold.

Having said that, one can see how there is a case for gold to ‘pull’ silver higher. The gold/silver ratio, which is one approach used to consider whether silver is inexpensive relative to gold, remains high at about 85. To put this in context, this ratio has largely ranged between 80-90 (outside of short-lived spikes) since 2022. However, this ratio was as low as 50 in the 2000s and as low as 20 in the 1970s. This suggests silver has room to outperform, given the right catalysts. A combination of an extended growth cycle (supporting industrial demand) and any consideration of the metal as a reserve asset candidate would support further gains over the long run. Even a stable gold/silver ratio would argue for gains in silver matching those for gold, if the current macro environment persists.

Gold-linked equities

Another popularly cited alternative to gold is the gold mining equities sector. The main argument is that the sector’s revenue should be highly correlated with gains in gold prices given this is the sector’s main product.

While we would agree with this headline conclusion, we would again be extremely careful about making simplistic extrapolations. Like any other corporation, mining sector firms have to manage not only revenue, but also balance those with costs and other usual corporate governance topics. On the upside, the sector can offer similar, or higher (in a catch-up scenario), returns to gold when gold price returns remain robust and other variables do not change. On the downside, however, the sector remains susceptible to both input costs (particularly energy prices, which are a key input) and any broader equity market downturn.

Our view is that the sector currently offers an attractive short-term opportunity given catch-up potential. Even if gold prices remain around current levels, the sector benefits from historically high profit margins, given all-in production costs are less than USD 2,000/oz. However, this may not hold in the long run as other factors (such as input costs) can cause the relationship of the sector with gold prices to deviate significantly.

Conclusion

We continue to like gold and expect central bank diversification demand to remain robust for now. We would, however, be more deliberate about alternatives that seek to offer similar, or potentially higher returns. As I often advise clients – if you want to buy gold, then buy gold.

Other precious metals, such as silver, or precious metal mining sector equities, can offer correlated returns. However, each differs from gold in different ways. They can be an attractive trade in their own right – we are tactically bullish on the gold mining equity sector – but they are not a direct substitute for the real thing.

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