Central banks fuel gold’s resurgence as safe-haven asset.

The Rise of Gold Shares

The gold share market has experienced a significant surge in recent years, with many investors taking notice of the potential for long-term growth. This trend is largely driven by the increasing demand for gold and silver, particularly in the context of central banks and institutional investors. Key factors contributing to the rise of gold shares include:

• Central banks’ growing interest in gold as a safe-haven asset
• Increasing demand for gold and silver in the jewelry and industrial sectors
• The rise of ETFs and other investment products that allow for easy diversification and accessibility

The Role of Central Banks

Central banks have played a crucial role in driving the growth of the gold share market.

The Economic Outlook for Gold in 2025

As the world grapples with the implications of a Donald Trump presidency, investors are taking note of the potential impact on the gold market. One area of focus is the prospect of tax cuts, which could lead to increased demand for the metal.

The Role of Tax Cuts in Gold Demand

Tax cuts can have a significant impact on the economy, and gold is often seen as a safe-haven asset during times of economic uncertainty. When governments reduce taxes, it can lead to increased consumer spending and investment, which in turn can drive up demand for gold. This is because gold is often used as a store of value and a hedge against inflation. Key factors that could influence gold demand include: + The level of tax cuts implemented + The state of the economy + The level of inflation + The level of interest rates

Central Banks and Gold Reserves

Another area of focus is the role of central banks in the gold market. Central banks are expected to remain net buyers of gold, which could support the metal into 2025. This is because central banks often use gold as a reserve asset, and they tend to buy gold when they expect the metal to appreciate in value. Key factors that could influence central bank demand for gold include: + The state of the economy + The level of inflation + The level of interest rates + The level of global uncertainty

Geopolitical Distress and Polarisation

Geopolitical distress and polarisation are also expected to support the gold market in 2025. This is because gold is often seen as a safe-haven asset during times of conflict or uncertainty.

But, is it a good idea?

The Case for Streaming Companies

Streaming companies, such as Sandstorm Gold, are companies that own a percentage of gold mines but do not operate them directly. Instead, they partner with mining companies to receive a percentage of the gold produced. This model allows them to benefit from the gold production without the significant costs and risks associated with operating a mine. Key benefits of streaming companies: + Reduced capital requirements + Lower operational risks + Ability to benefit from gold production without direct involvement + Potential for higher returns due to lower costs

The Risks of Streaming Companies

While streaming companies can offer attractive benefits, they also come with significant risks. Some of the key risks include:

• Lack of control: Streaming companies have limited control over the mining operations and the gold production process. Dependence on mining partners: Streaming companies rely on their mining partners to deliver gold production, which can be affected by various factors such as market conditions, regulatory changes, and operational issues. Price volatility: Streaming companies are exposed to price volatility, which can impact their revenue and profitability.
  

  Wheaton Precious Metals poised for success with Berenberg’s endorsement.

  Why Berenberg’s Recommendation Matters

  Berenberg’s recommendation is significant because it highlights the potential of Wheaton Precious Metals to outperform its peers in the streaming industry. As a leading analyst firm, Berenberg’s endorsement carries substantial weight in the market. Their recommendation can influence investor sentiment and potentially drive up the stock price of Wheaton Precious Metals.

  Key Factors Behind Berenberg’s Recommendation

• Strong Financial Performance: Wheaton Precious Metals has consistently demonstrated strong financial performance, with a proven track record of generating revenue and maintaining a healthy balance sheet. Growing Demand for Precious Metals: The demand for precious metals is increasing due to various factors, including the growing need for renewable energy sources and the rise of electric vehicles.

  A version of this article first appeared in the Financial Mail.