Why experts say it’s a buying opportunity despite price volatility
The cold beer in the Kalgoorlie Hotel’s main bar is as frothy as the price of gold and news of the metal’s spectacular rise is on drinkers’ lips.
“This is a hot topic,” says Lauriska De Billot, one of the hotel’s managers. Punters talk about nearby mines expanding and new workers coming to town due to the boom in activity. “The only downside is that we don’t have enough accommodation for them,” he says.
About a dozen blocks from the bar on the edge of town is the Super Pit, one of Australia’s deepest open-pit mines. It reveals a golden mile of some of the world’s richest deposits, producing more than 60 million ounces of precious metals since the 1980s.
This wealth is flowing into the share price of the mine’s owner, Northern Star Resources, causing a seismic shift in the status of gold producers on the Australian Securities Exchange.
Hugh Dive of Atlas Funds Management says gold miners are well represented among the ASX’s top 200 companies, with even younger producers making it onto the list. “They’ve gone from almost nothing, or just a rounding error, to something that can’t be ignored,” he says.
Even in the small ordinary index, which tracks the ASX’s 200 smaller companies, gold stocks now account for around 15 per cent; This complicates fund allocation for managers like Pie Funds Management’s Michelle Lopez. New Zealand-based Pie handles $3.2 billion in funds, about half of which are in Australian stocks.
“The benchmark has a much larger bias against commodities now than it did 12 months ago,” Lopez says. “That’s what we’re trying to navigate.”
In just two years, Northern Star’s shares have risen 122 percent. The miner’s market capitalization, now at $40.8 billion, puts it ahead of Coles and Woolworths, which are languishing at around $29 billion and $38 billion respectively.
The sparkle of gold is not limited to just one producer.
Evolution Mining’s shares rose a staggering 400 per cent in the two years to January 29, reflecting the success of its six mines in NSW, WA, Queensland and Canada. “We’ve positioned ourselves extremely well to make a lot of money in a gold price environment like this. Our profit margins are at record levels,” says Evolution president Jake Klein.
“This is a circular business. We want to be circular,” says Klein. “When prices are high, we want to raise cash, like we’re doing now. When prices are low, we want to expand.”
Others, like South32, are also surfing the commodity boom. The Cannington operation in northwestern Queensland, one of the world’s largest silver mines, has helped South32 shares rise nearly 40 per cent in the same period.
The rich minerals they mine are fueling another great gold boom in history.
Gold’s rapid rise
The Australian Minerals Council announced that gold will become the country’s second largest export revenue this year, surpassing coal and natural gas. Record global prices and rising mineral production are supporting forecasts for export growth of 28 percent, from $47 billion last year to $60 billion.
The price of gold and its sister metal silver tends to rise in response to geopolitical or economic events that shake the world.
Traces of the rise in recent years date back to early October 2023. Immediately after Hamas launched its devastating attack on Israel and massacred more than 1,200 people, upward pressure on gold and other precious metals began to increase inexorably.
Israel’s violent response, resulting in the deaths of an estimated 70,000 Palestinians, has added another war to an already fragile global geopolitical landscape as it struggles to contain Russia’s attack on Ukraine.
A year later, another major event – Donald Trump’s second election to the US presidency in early November 2024 – has boosted gold’s luster once again.
Subsequent trade wars with China, cascading tariffs targeting Canada, Mexico and the rest of the world, the bombing of mountain retreats in Iran, the capture of Venezuelan dictator Nicolás Maduro and rumors of the annexation of Greenland have rattled stock markets and torn apart old alliances.
But it’s not gold. Savvy investors, sovereign central banks stockpiling their reserves, exchange-traded funds, migrant workers, high-minded shopkeepers, delivery drivers and well-dressed city workers are piling in.
“We saw retail buyers buying coins and bars in the last quarter of 2025 at the fastest pace in 12 years,” says Ryan Felsman, chief economist at Commsec, Australia’s largest equity trading platform. “This has increased the impact of the mainstream ETF [exchange-traded funds] There is also demand.”
In September last year, GOLD’s fund, the largest ETF on the ASX, was worth around $5.4bn. It’s now up 25 percent to nearly $6.8 billion.
Structured as trusts, ETFs hold physical bullion in secure vaults to back their traded shares. These generally reflect the price of gold, which nearly doubled during the year to January 29, when it hit an all-time high of US$5600 ($8000) during the day.
Silver’s orbit became even more stratospheric. It rose a staggering 298 percent in the same time period, from around $30 per ounce to $121 per ounce. Even the crypto industry has gotten caught up in the gold craze.
Bloomberg Crypto giant Tether Holdings reportedly now controls the world’s largest known hoard of bullion outside of banks and nation-states and has it stored in a high-security vault in a former nuclear bunker in Switzerland.
However, the rise of precious metals came to an abrupt halt at the end of January. Silver had its biggest daily drop ever on Friday, January 30, and gold had its biggest drop since 2013. “This bubble burst temporarily on Friday and continued through Monday,” Felsman said.
Volatility was largely attributed to Trump’s announcement of new Federal Reserve chairman Kevin Warsh; This is a pick where investors think he may be less aggressive than other candidates in lowering U.S. interest rates.
Commonwealth Bank commodities analyst Vivek Dhar says given Warsh’s background and the context of his candidacy, it is difficult to see his appointment as the beginning of a permanent downturn in gold and silver prices. “Such a view would imply sustainable stability in the US policy environment. And we think it is too early to believe that this is the case.”
“We think this is a buying opportunity for both gold and silver as the market eventually continues to favor hard assets against the US dollar,” Dhar said.
Investors seem to agree that the fundamentals that propelled bullion to record highs remain intact. Gold started to recover last week. After rising above $4500, it rose again above $5000.
Other safe-haven assets are not performing as well as gold, despite sharp declines. Bitcoin, often referred to as digital gold, has fallen almost 40 percent to around $74,000 since its value peaked above $124,000 in October last year and is still declining.
Jordan Eliseo, managing director of gold trading company ABC Bullion, says queues at the company’s Martin Place store are still commonplace. “It’s an incredibly busy time in the precious metals industry.”
“The number of people selling has increased quite significantly. However, this figure has been overshadowed, especially in the last year, by the increase in the number of people coming to buy for the first time. For every 100 people lining up in our queues… about 80 to 85 of them buy and 15 to 20 sell,” says Eliseo.
Significant increases in gold prices over the past 20 years occurred with the 2008 global financial crisis, Brexit and Trump’s first election in 2016, and the onset of the global pandemic in 2020.
“This [latest] “It’s the biggest increase I’ve ever seen,” he says.
About a quarter of ABC’s bullion is being sold to self-managed super fund trustees. “These are people who are either pre-retirement or retired. They are more conservative in how they want to manage their wealth. Buying as a guardian of wealth is very attractive,” says Eliseo.
He believes today’s bull market is still “on very solid footing and has a long way to go.”
Central banks that hedge against the US dollar are still buying, consumers in Asia and the Middle East are also buying, and local demand for bullion and ETFs is quite high, Eliseo said.
John Kochanski, an expert consultant to Australian gold producers, says gold has never experienced a price drop. “The metal has returned to its trend, having gone through periodic corrections and consolidations for more than a century, but has not been affected by the structural collapses seen in some modern commodities, especially the so-called strategic metals.”
He argues that gold’s structural resilience will continue to support its role as a long-term store of wealth and explains why people are still buying even at record prices.
“Corrections happen. Volatility is normal. A price collapse is not,” he says.
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Simon Johanson is a business journalist for The Age and The Sydney Morning Herald.Connect with: X or email.
