The detail investors miss as gold and silver soar – Fat Tail Daily

I’m in Melbourne this week for the Bullion & Bordeaux Hour. (Curious? Find out more here.) And to farewell my colleague, Callum Newman.

It’s mid-September 2025 already. I reflect on the same time in 2022 and 2023. How much things have changed for precious metals!

If you’re not aware, gold and silver have been on a tear. Gold is now knocking on the door of US$3,700 an ounce (~AU$5,550), having soared past US$3,500 (~AU$5,250) at the start of this month. This leaves gold 40% higher since the start of the year.

Silver is now trading at over US$42 (~A$63), breaking above US$40 on 1^st September. Silver is outperforming gold over the same period, having rallied by almost 45%.

These are phenomenal returns!

Just so you know, gold’s exceptional performance isn’t a one-off occurrence.

Let’s take a step back and see how they both performed since 2021, when the world turned upside down as governments and central banks released a tsunami of liquidity post-pandemic:

Source: GoldHub Australia

Over this period, gold’s average annual return was 18.7% while silver returned 14.1%.

These returns are impressive, don’t you agree?

Let me put this into context.

Remember that the traditional average annual return of equities over time is around 8-10%. Well, that was before we lived in the zero interest rate environment, brought about by the subprime crisis in 2007-09. Since then, investing became the wild west as many investors have thrown aside risk management to chase returns.

We’ve reached a stage where even gold, a historically safe haven asset, is registering annual returns that you’d normally make taking greater risks.

We’re currently a gold bull market. Leading gold stocks have set new highs month after month. The ASX Gold Index [ASX:XGD] is now trading at over 14,000 points.

To think that three years ago, gold and silver were stuck in a rut. Only the most faithful believers were hanging around while the market fawned on lithium, rare earths, and nickel.

The index found its bottom at 4,245 points in late-September 2022, before staging a recovery that took us to the highs we’re seeing now:

Source: Refinitiv Eikon

It has tripled since.

The times we live in nowadays!

The bull market is raging, join or watch?

If you’re a regular reader, you’re likely to be grinning from ear to ear as your portfolio of gold stocks registers many wins. Not every stock has taken off, especially the smaller explorers and developers. However, you’ve scored some big winners, since many producers are trading at levels never seen even in 2011 which was probably the wildest bull market this millennium.

The burning question is how much further does this bull market have to go…

Consider this.

Leading mid-tier producers such as Genesis Minerals [ASX:GMD], Ramelius Resources [ASX:RMS], Perseus Mining [ASX:PRU], and Capricorn Metals [ASX:CMM] are all valued at over $5 billion. These companies produced between 120,000-500,000 ounces of gold in the 2024-25 financial year. Below is the production profile of Ramelius Resources to show you how it’s been relatively consistent in the last seven years:

Source: GoldHub Australia

Junior producers such as Catalyst Metals [ASX:CYL], Ora Banda Mining [ASX:OBM], and Pantoro Gold [ASX:PNR] are valued at around $2 billion. These companies are also relatively newcomers, except for Pantoro Gold, having brought on their mines to produce gold during 2021-24. They’re now producing 100,000-120,000 ounces of gold. Here’s the production profile of Pantoro Gold to show you how it’s grown recently:

Source: GoldHub Australia

I won’t mince my words about this. Many gold producers are trading at generous levels and I haven’t seen anything like this since I’ve invested in them.

To show you how far we’ve run, wind the clock back to September 2022. At that time, gold and gold stocks were at their lowest amidst the central bank rapid rate hike cycle. Which companies fetched a $6 billion price tag?

Even Evolution Mining [ASX:EVN] traded at around $3.5 billion at its lowest. It produced around 640,000 ounces of gold for the 2022 financial year, disappointing the market because it fell short of market expectations:

Source: GoldHub Australia

What types of producers were worth $2 billion at the time?

Perseus Mining [ASX:PRU] traded at around $2 billion. It was one of the few gold producers that gained during the bear market. The company brought the Yaoure gold mine to production, helping increase its annual gold production from 320,000 ounces to almost 500,000 ounces:

Source: GoldHub Australia

Can you see the sheer contrast between the valuations today and three years ago? Companies that produce much less gold today are trading at prices of larger producers back then.

That’s what you get in a raging bull market!

Beware irrational exuberance

Despite my stance as a strong proponent for precious metals, I’m not blind to the market sentiment and how that can impact the value of these assets.

I’ve been on record several times in public for my cautious stance on how to position myself in this bull market.

Let me clarify my views.

I don’t believe that gold and silver are overvalued. Compared to a rapidly diminishing fiat currency, the US dollar, they should be more valuable.

Logically speaking, it is more desirable to receive gold and silver in return for your labour, goods and other things than plastic notes, base metal coins, and bytes stored in a computer account.

It’s basic mathematics. Take a number and divide it by something that approaches zero, and you get something that approaches infinity.

It’s extreme to say that all our currencies are completely worthless so the price of everything denominated in those currencies should approach infinity. But this is the path I believe we have been travelling at increasing pace since 1971.

That’s why the price of everything drifts upwards over the long-term. Our financial system is silently inflating away. The pace at which gold and silver have rallied in the recent five years is a warning sign.

Your chance to identify the next winning gold stocks

Many will invariably get ahead of themselves and plunge into gold and silver assets. I daresay those who do so now out of panic will be in for a nasty surprise.

Bull markets can create many victims as they make winners. The crucial point is whether one knows timing and can infer value of the assets they’re looking to invest in.

However, FOMO will cause many to throw caution to the wind. They want to be in it for fear they won’t win if they hesitate.

If you want to be a winner and not a victim, now is not the time to blindly run with the crowd and chase the best stocks to the top. Let me guide you to pick some unloved explorers and early-stage developers that have potential to rally and close the gap on the leading gold producers.

Check out Gold Stock Pro, my premium speculative gold stock newsletter. I take a long-term perspective by closely reviewing which companies own the right projects with development potential.

Hopefully this will deliver better performance over time. It beats randomly picking penny dreadfuls, riding one-hit wonders in the frenzy and giving back those gains and more when the gold fever fades!