Olivier Rotenberg, Apis AM conducting officer (left), and Philippe Giaro, member of the board of managers of IW Alternative GP (right). (Photo: Apis Asset Management)

Olivier Rotenberg, Apis AM conducting officer (left), and Philippe Giaro, member of the board of managers of IW Alternative GP (right). (Photo: Apis Asset Management)

Apis Asset Management sees a bright outlook for the gold market with a resurgence in its value and a positive impact on mining stocks.

The renewed appeal of gold

In recent months, gold has regained some of its shine to flirt with historic highs. Whilst gold is no longer an exchange currency nor the historical ‘standard’ set by the US Federal Reserve, and since the Bretton Woods system has long been abandoned, some countries have begun to increase their reserves again.

In today’s particular geopolitical, economic and financial environment, non-aligned countries are increasingly detaching themselves from – if not outright showing defiance towards – the US dollar. More generally, gold acts as a security measure and a hedge against global economic volatility, providing strong backing for emerging currencies and a natural hedge against inflation.

Mining stocks and M&A activity

This resurgence in gold’s value also has a significant impact on mining stocks. As it rises, mining companies often see their share prices increase reflecting the enhanced profitability and financial stability brought with higher gold prices. With inflation currently under control, the upside potential for mining stocks becomes more apparent. The historical lag between gold price increases and mining stock valuations is expected to finally narrow whilst the positive correlations should once again reach higher levels. Whilst gold has recently reached historic highs (2,450 USD in May 2024), mining stocks are still, on average, 60% below their peak. This scenario presents a promising outlook for mining stocks.

This is evidenced by significant, large-scale M&A activity in the gold mining sector. They have occurred at the pace of approximately one transaction per year in the recent past. Examples include the Newmont acquisition of Newcrest in 2023, the Agnico-Eagle and Pan American Silver acquisition of Yamana Gold in 2022, the Newmont acquisition of Goldcorp in 2019 and the Barrick Gold merger with Randgold in 2018.

The strategic importance of gold

Smaller companies are not lagging either, with a significant number of consolidations as well, as exemplified by the activity of the first six months of 2024 which include the following recent acquisitions: Goldsource Mines by Mako Mining, Argonaut Gold by Alamos Gold, HighGold Mining by Contango ORE and Timberline Resources by McEwen Mining. Although mergers and acquisitions are theoretically value-creating, this has yet to be reflected in stock prices, leaving room for potential price appreciation. The divergence can be attributed to rising exploration and operational costs alongside environmental regulations and political considerations. Nonetheless, with inflation “under control” and regulations “under review,” the potential appreciation in mining stocks should become more evident.

The importance of gold in our economy is again becoming strategic, as the dominance of the USD seems to be weakening alongside other FIAT moneys. This emphasises the dynamic relationship between gold prices and the mining sector, including M&A trends.

At Apis, we welcome this opportunity and intend to leverage our expertise in managing our funds that invest in gold and silver mining equities. These funds are poised to benefit from, amongst others, current geopolitical tensions, gold acquisitions by central banks and Asian countries, the disparity between precious metal mining equities and rising gold prices, 20-year low gold mining stock valuations, producers increased margins and a historically lower than 1% global assets allocated to gold.

is a privately owned Luxembourg-based Ucits and AIFM management company that has specialised in commodity funds over the past decade. For more information, visit .

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