Trump’s not orange – he’s gold! | The Green Line

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8 May 2025

The weekend before the 2024 US presidential election, some (non-investment) friends asked what to buy for a Trump victory. My answer was clear – gold.

Slightly embarrassing then to find gold was just about the only asset that fell after Trump’s victory, dropping almost 10% in short order to about $2,570 an ounce.

Since then, of course, gold has proved the ideal investment in the chaotic first 100 days of the second Trump presidency, up some 30% from the post-election low and 26% this year to the end of April. It seems it’s true – Trump is gold, not orange.

Actually, the bull market in gold started well before Trump’s return to the White House. In late 2022, the gold price started to rise, breaking its decades long relationship to real interest rates.

What changed? First, foreign central banks, led by China, started steadily buying gold to reduce their dependence on the dollar. Sticky inflation provided further support. More recently, concerns about US treasuries, given the record peacetime government deficit, have added further to gold’s attractions. Finally, Trump’s tariffs, ‘beggar thy neighbour’ policies and desire to weaken the dollar have seen interest in gold surge.

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We believe gold has a core part to play in a sensibly diversified portfolio, especially in light of the uncertainties Trump is bringing to markets. However, after such a strong rise, it may be time to consider another way of gaining exposure to gold – gold mining stocks.

Largely ignored by investors, especially since the launch of easily investible gold bullion ETFs, gold mining companies have been working hard to refute the accusation that a gold mine is no more than ‘a hole in the ground with a liar standing at the top’. Costs are being controlled, capex is restrained and the sector has consolidated.

Historically, gold stocks have shown roughly twice the beta of gold bullion, both on the upside and notably on the downside. However, in recent years, gold miners have clearly lagged well behind the rise in the gold price. This alone would be a good argument for a catch-up trade.

As the chart shows, though, the most compelling case for gold miners is their record profitability at current gold prices. The green bars show how the ‘all in’ cash costs per ounce of gold produced – including tax, interest and growth capex – have lagged well behind the rise in the gold price.

This means gold miners are earning record profits per ounce of gold mined, well over $1,000/oz and potentially as high as $1,800/oz depending on what is included in costs. So, even if the gold price remains at current levels, cash flow yields are going to be mouth-wateringly attractive.

Of course, gold miners are still equities and are accordingly at risk in a major stock market sell-off. Buying mining stocks is not the same ‘safe haven’ trade as bullion, but the odds now look stacked in their favour.

Whether it is gold miners or gold bullion, gold exposure looks like a vital hedge in an increasingly uncertain world – especially if the dollar continues to lose its safe-haven status.

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Piers Wheeler

Director – Institutional

T +44 (0)20 7963 8258

Developing and executing asset management strategy for capital raising and strategic relationship management. Coverage includes EMEA, Asia and Australia. Piers joined Ruffer in 2021, having previously worked with asset management firms including Eastspring, AMP Capital and LEK as a strategic consultant. He holds a MA from the Bayes Business School and a BA (Hons) from the University of Oxford.

Annabel Paterson

Senior Associate – Institutional

T +44 (0)20 7963 8123

Joined Ruffer in 2021, having graduated with a first class honours degree in land economics from the University of Cambridge. After two years working with the UK Private Wealth team and completing her IMC and CFA Level I qualifications, she now supports Ruffer’s global business development and client servicing efforts.

Articles by Annabel

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Trump’s not orange – he’s gold!