How Gold Stocks Are Primed for President Trump’s Return

Gold had an amazing year in 2024, rising 27% in US dollar terms and 38% in our dollar. The only years since 2000 when gold surpassed last year’s performance were 2007, 2009, and 2010.

Like those three years, gold’s performance came from the culmination of rising geopolitical tensions and failed monetary policies.

With the inauguration of President Donald J. Trump overnight, the US is entering a new era in economics and geopolitics.

The implications will be significant and likely to last beyond his four-year term.

If the Trump administration gets its way, the US will bring back more manufacturing within its shores, reduce taxes and use tariffs to fund subsidies to strengthen its domestic industries and bring US troops overseas back into its own soil, among other things.

Other countries could do similar, shifting the world from a unipolar global order with the US taking the lead to a multipolar global order in which countries within their regional blocs oversee their own affairs.

International trade will continue to flourish but in a different form. So will foreign policy and how countries relate to each other and govern themselves.

But reality will always differ from one’s plans. Within that, there will be negotiations, compromises and resistance.

All these mean a continuation of what has been happening, in terms of the messy economy, financial markets and geopolitics, at least for some time.

And what better asset to help you protect yourself from that than one of the best-performing commodities in 2024, gold?

But beyond gold bullion coins and bars, something major is happening with gold mining companies.

You should pay particular attention to this, as the potential benefits you can reap could be even more rewarding.

Let’s explore this today.

How conditions favour gold mining companies
to outperform gold

History repeats itself.

We have just seen the end of another failed round of monetary policies. Rate cuts are now in play, potentially setting gold up for another good year.

In addition, the economic policies of the Trump administration could help gold through a weaker US dollar.

There’s been a lot of action within the gold mining sector. From the larger producers merging to create major producers to smaller explorers consolidating, this sector is clearly transforming.

While the amount of corporate activity in this space may raise concerns that gold mining companies are in a bubble, a closer look at the price movements of gold and gold stocks suggests otherwise.

For one, gold rallied significantly in the last four years as gold stocks clearly lag as you can see in the figure below:

Since finding a bottom in September 2022, gold producers (represented by the ASX Gold Index [ASX:XGD]) have staged a solid recovery. Meanwhile, gold explorers (represented by the Speculative Gold Stocks Index) are still trailing gold and their larger counterparts.

Normally, gold explorers bounce more violently in a bull market than gold producers, as you can see in the last gold stock bull market in 2019-20:

I can tell you that there are past bull markets where gold producers do better than gold explorers. However, you normally expect that the smallest companies stage the most violent rallies in the manic phase of the bull market. I believe we haven’t seen that yet for this bull market.

Making old gold mines great again!

I believe that gold explorers shouldn’t underperform gold producers this time.

Why is that?

Let’s look at several gold explorers and early-stage developers that delivered a ripper of a return in 2023-24. These include Southern Cross Gold [ASX:SXG], Black Cat Syndicate [ASX:BC8] and Spartan Resources [ASX:SPR].

What are the secrets behind their outstanding performance?

They’ve all reported successes in their exploration and mine development. These companies reviewed their mine sites to look at where the previous owners explored. They subsequently dug in a different direction to find new veins of minerals.

Except for Southern Cross Gold, the others have reported resource upgrades and even drafted mine plans showing the potential profitability of these operations.

Despite that, Southern Cross Gold’s drilling campaigns at Sunday Creek unleashed spectacular veins of gold and antimony. Some of these holes have joined the Hall of Fame as one of the best for 2023 and 2024.

Although the company has yet to release a resource estimate for the ore body, evidence shows that the Sunday Creek mine could be huge.

These are some examples of the big winners so far.

Of course, there are no guarantees here, gold mining stocks remain risky and volatile, and not all will perform like the ones I’ve showcased here.

But following behind the stocks discussed above are several companies reviving their mine deposits and dusting the cobwebs of their processing plants. These are so close to production that you’ll see a few more operating mines in Western Australia this year. Shareholders who own these companies could enjoy a good return as they bring their mines to production.

We’ve prepared this presentation if you’re interested in these opportunities and want to learn more.

Don’t hesitate, act now!

God bless,

Brian Chu,
Editor, Gold Stock Pro and The Australian Gold Report