The gold sector made a record start to 2025. Not only did the price of the precious metal reach new highs, but the mining companies were also extracting more gold than ever before in a first quarter. According to figures from the World Gold Council (WGC), the amount of gold mined globally from January to March came to 855.73 tonnes. That puts production almost 300 kg above the previous peak reached in the first quarter of 2016. Production had also risen throughout the previous year, hitting a new record. For the first time since 2019, companies actually managed to deliver the quantities they had predicted at the start of the year. A mix of rising prices, higher production volumes and achieved forecasts is also adding lustre to the sector on the stock market. Shares in gold suppliers have appreciated markedly of late. This is also true of industry giant Newmont: the capitalisation of the US mining group increased by 45% in the first four months of the year.
It is not only Newmont’s recent share price performance that is symptomatic of the sector as a whole: a glance at the latest quarterly report of the Denver-based group illustrates the ongoing difficulties in the mining industry. At 1.54 million ounces, Newmont's production in the first three months of the year was more than 8% down on the same period the previous year. While the sale of operating establishments certainly had an impact in this regard, production also stalled in other areas, such as the “Nevada Gold Mines” operated as a joint venture with its Canadian rival, Barrick. In addition to various problems expanding capacities, the Newmont report also starkly reveals the general cost pressures in mining. Newmont puts its first-quarter “all-in sustaining costs”, or AISC for short, at USD 1,651 per troy ounce of gold – a rise of just under 15% compared with 2024. Thanks to the much greater increase in selling prices, however – Newmont received USD 2,944 per ounce on average, 41% up on the previous year – it managed to post a jump in profits, with the adjusted earnings per share more than doubling to USD 1.25.
The issue of costs is set to continue plaguing the sector. In the view of the WGC, the licence fees alone, which are linked to the price of gold, are putting sustained pressure on the AISC. Companies are also still having to deal with imponderables when it comes to capacities, too. These include the geological circumstances just as much as legal issues relating to approvals and essential maintenance work. Alongside these risks, the price of gold remains of critical importance for the future prospects of mining shares. Leonteq has launched an interesting new product aimed at investors who are nervous about a direct investment given the uncertain picture outlined above. The bonus certificate brings five industry representatives together. As well as Newmont and Barrick Gold, they are Agnico Eagle Mines, Franco-Nevada and Wheaton Precious Metals. Investors have an opportunity to profit from the rising share prices of this quintet. They are also partially protected: as long as no underlying falls below the barrier over the next three years, the repayment will be at least the bonus level of 100%.
An equally weighted basket consists of the five underlyings determines the upside participation. The potential return is limited to 165% of the initial level, which means that the bonus certificate will deliver a maximum repayment of 165% of the denomination. Should the gold shares perform even better on average, holders of this product would not share in any increase above this level. In return, the investment is protected to a certain extent from any correction in the underlyings. The barrier stands at a low 59% of the initial level. The bonus payment is only at risk if the weakest member of the quintet falls by more than 40% from its current figure. If this negative event occurs, the investment would be linked to the progress of the weakest share at the time of final fixing. Please note that the functionality outlined above does not kick in fully until the maturity date. A range of parameters will affect the value of the product over the term. Alongside the share prices, these include the volatilities, dividends and interest rates.
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