Cashing in on the gold rush

Annabel Brodie-Smith, Communications Director of the Association of Investment Companies (AIC), said: “Investment trusts are a good way of getting exposure to gold and silver in a diversified portfolio either through dedicated commodities trusts, or through some flexible investment trusts, which aim to preserve the value of your money. Above all else, gold has been an inflation hedge for centuries and continues to act as a safe haven for those wanting to protect their wealth.”

We asked a range of investment trust managers who have exposure to precious metals whether they are bullish on gold and silver, and the best ways to profit from these valuable commodities.

Robert Crayfourd, Portfolio Manager of Golden Prospect Precious Metals and CQS Natural Resources Growth and Income, said: “We remain bullish on gold despite repeated new all-time highs. The key reason for this is that until recently the gold strength was mostly driven by central bank and some bar and coin demand. We have only recently seen financial markets returning to meaningful buying as evidenced by a steady increase in holdings of physical gold ETFs this year.

“We expect the recent increase in financial market buying to continue, if not accelerate, driven by concerns about government debt affordability and stagflationary pressures that continue to show up in global data. With pressure on governments and economic growth, investors will continue to seek a safe haven in gold.

“The near-term outlook for gold may be driven by rate cut expectations. With Trump looking to take control of the US Federal Reserve, there is increased chance of a rate cutting cycle in the US despite sticky inflation. This creates a very supportive backdrop for gold given its status as an inflation hedge, and we think this could easily see gold testing $4,000 per ounce later this year.

“The bear case for gold would be if the global rate cutting cycle doesn’t materialise, but then again we believe this would just heighten the concern around government debt affordability globally and would therefore be supportive for gold over the medium term.”

Evy Hambro, Co-Portfolio Manager of Blackrock World Mining Trust, said: “Gold has been on an impressive run over the last few years and reached real breakout momentum this year.

“Inflation concerns, government debt worries, geopolitical uncertainty and non-stop growth in central bank demand have all combined to support price moves. In 2025, a weaker US dollar and lower real interest rates have added extra momentum – gold and silver prices are up 35% and 40% respectively in US dollar terms, year to date, with gold making multiple new all-time highs during the year. We believe precious metal prices remain well supported today and should remain so until the underlying economic challenges, such as excessive government debt and erosion of paper currency purchasing power, are fixed.”

Emma Moriarty, Portfolio Manager at CG Asset Management, which manages Capital Gearing Trust, said: “The returns that we would expect to receive from an asset class are, at least in part, a function of the starting price. So with gold now trading at near all-time highs, we are at an expensive starting point.

“The fundamental value of gold is hard to know. The demand for gold is not particularly transparent, and the supply operates with a significant lag. We do know for sure that there has been a significant increase in demand from central banks in countries which are not aligned with the West. However, it is also true that central banks in aggregate now hold as much gold as they did during the time of Bretton Woods, when gold was actually part of the international monetary system. So gold looks fairly expensively priced today.

“The bear case for gold is that the change in demand that we have seen recently falls away. There could be a number of catalysts for this; a de-escalation of some of the geopolitical tensions which have supported demand from non-central bank buyers may slow gold buying. So too might a disinflationary shock from, for example, the weaker global growth that is expected. The bull case for gold is that none of these things happen.”

Is it better to invest in miners or the metal itself?

Emma Moriarty, Portfolio Manager at CG Asset Management, which manages Capital Gearing Trust, said: “We invest in gold bullion through an Exchange Traded Commodity which is backed by physical gold in Switzerland. We are not directly invested in gold miners. If you look at some of the main miners, the share prices have not necessarily tracked the spot price of gold particularly well. On top of that, it would also likely involve taking on an exposure to US equities, another asset class where valuations look very stretched.”

Evy Hambro, Co-Portfolio Manager of Blackrock World Mining Trust, said: “Gold mining companies have tended to deliver superior returns relative to the price of gold itself over time with some periodic exceptions. For example, the FTSE Gold Mines Index rose 57% in the first half of 2025, compared with gold’s 25% gain, in US dollar terms.

“The current economic conditions remain favourable for mining companies as cost pressures have eased and energy prices have fallen, leading to gold producers enjoying higher margins from rising gold prices. This has led to strong free cash flows turning into reduced debt, higher dividends and more recently large amounts of share buybacks. Given the gold price forward curve trades well above most market estimates it is likely that miners could continue to generate profits that exceed expectations.”

Robert Crayfourd, Portfolio Manager of Golden Prospect Precious Metals and CQS Natural Resources Growth and Income, said: “Up until recently the miners have lagged the gold price, as they had not provided the operational leverage to the gold move you would normally expect. We have recently seen outperformance from the miners but there is further to go. Valuations remain attractive, especially for the mid-tier gold producers, where our trust focuses.

“Balance sheets are as strong as we have seen them, and high free cash flow will drive more M&A and consolidation. This is supportive of more upside from the junior miners, which are involved in the early stages of mining such as discovery and early production, as they close the valuation gap or end up being acquired. We believe generalists are still underweight the sector which should continue to drive flows into miners given the strong earnings and fundamentals.”

How has the gold price helped the performance of your trust?

Evy Hambro, Co-Portfolio Manager of Blackrock World Mining Trust, said: “Gold mining shares have done very well, often outperforming the metal itself. Most miners reported strong Q2 results, with particularly high free cash flow. The trust deliberately raised exposure to gold companies in 2024 and has maintained this at a high level ever since. As at the end of June 2025, gold miners made up 30% of the assets, with silver and platinum producers together adding another 3.5%.

“Exposure to these companies has been a key driver of absolute return during the year as they have significantly outperformed the rest of the mining sector. Should gold prices remain healthy and companies return excess cash to shareholders it is hoped that this could be a material driver for the trust’s income in 2026.”

Emma Moriarty, Portfolio Manager at CG Asset Management, which manages Capital Gearing Trust, said: “It has certainly helped, although Capital Gearing Trust only holds a 1% allocation to gold, so the impact is fairly muted. We keep a low allocation to gold for several reasons. First, the price of gold is at an expensive starting point. Secondly, our view is that developed market inflation-linked government bonds are a more direct portfolio hedge, and so we allocate almost 40% of Capital Gearing Trust’s portfolio to this asset class.

“Lastly, like many commodities, the price of gold is highly volatile in a way that we don’t think is consistent with Capital Gearing Trust’s wealth preservation mandate. The situation where we would expect gold to perform is in all-out war or political upheaval. We maintain an allocation to gold in the trust because we live in uncertain times.”

What are the main risks to the outlook for gold and silver?

Evy Hambro, Co-Portfolio Manager of Blackrock World Mining Trust, said: “The main risks come from reduced investor concerns about government debt and geopolitical conditions. For the mining companies the main risk is that they squander the cash being generated on poorly thought-out capital allocation decisions.”

Robert Crayfourd, Portfolio Manager of Golden Prospect Precious Metals and CQS Natural Resources Growth and Income, said: “A Russian-Ukrainian ceasefire would probably impact the price but we don’t believe that has been a big driver on the upside, so any downside pressure should prove short-lived.

“Jewellery demand is obviously a factor as well, but having traded at a range around $3,300 per ounce from May through August, that prior strength is already evident in current jewellery demand, which has slowed as the price has increased. So on jewellery demand we see a muted negative impact from here given the move up to $3,500 per ounce.”

What are your thoughts on bitcoin being ‘digital gold’?

Emma Moriarty, Portfolio Manager at CG Asset Management, which manages Capital Gearing Trust, said: “Absolutely not! We share some of the concerns held by bitcoin advocates – for example, scepticism around loose fiscal policy, excessive central bank balance sheet size, and the potential for sustained, elevated levels of inflation. However, we do not think that bitcoin is the answer to this.

“Bitcoin fails on all three of the standard criteria for currency – it is not a standard unit of account; it is too volatile to be a store of value; and transacting in it is too convoluted for it to function as a genuine medium exchange. It is an ESG nightmare. The energy intensity of transacting in it is significant; it is heavily associated with criminal activities; and it operates within a subsector which is largely unregulated. Until any of these features change, our view is that the fundamental worth of this ‘asset’ may well be zero.”

- ENDS -

Follow us on X @AICPRESS

Notes to editors

1. The Association of Investment Companies (AIC) represents a broad range of investment trusts and VCTs, collectively known as investment companies. The AIC’s vision is for closed-ended investment companies to be understood and considered by every investor. The AIC has 294 members and the industry has total assets of approximately £267 billion.
2. For more information about the AIC and investment trusts, visit the AIC’s website.
3. Disclaimer: The information contained in this press release does not constitute investment advice or personal recommendation and it is not an invitation or inducement to engage in investment activity. You should seek independent financial and, if appropriate, legal advice as to the suitability of any investment decision. Past performance is not a guide to future performance. The value of investment company shares, and the income from them, can fall as well as rise. You may not get back the full amount invested and, in some cases, nothing at all.
4. To stop receiving AIC press releases, please contact the communications team.