Monthly report (NO17 Gold) – February 2025

Monthly fund update

Key points

• NO17 Gold ended February down 0.8% (in Australian dollars, or up 1.6% in US dollars). Gold miners consolidated following a very strong month in January.

• Gold miners consolidated during the month with the gold bullion price near to all-time highs and following the sector’s very strong performance in January. While this was the catalyst for some profit taking in a number of stocks, at sector level, numerous dips were decisively bought, which we believe is a bullish signal.
• Gold strengthened on lower real yields, the weaker US dollar and its safe haven status against a backdrop of falling risk appetite as a result of tariffs and worries about the US economy.
• The general perception among investors who are not allocated to the sector is that they have missed the rally. This couldn’t be further from our base case.
• Gold mining stocks remain extremely attractive with valuations at what we believe are 25-year lows, during a continuing uptrend in the gold price. We see this dislocation as a significant opportunity which markets haven’t yet recognised. The launch of various new gold equity funds is a lead indicator that this is beginning to be recognised.
• We have a very positive outlook for the price of gold bullion also and there is no change to our belief that gold bullion ETFs are in an accumulation cycle at the same time as central banks are buying gold in volumes not seen since the 1960s.
• The potential for a protracted global trade war (which would be inflationary) at a time when inflation is already elevated and proving sticky, should be motivating investors to identify investments which would stand to benefit from such a scenario. We recall that the second inflation shock in the 1970s resulted in the gold price spiking by 179% over 12 months.