The FTSE 100 leading index of UK shares has experienced bumps along the way. But long-term investors here have enjoyed some tasty profits since its inception in 1984.
Over that time, the Footsie has risen almost 800% in value, culminating in recent peaks near 9,000 points. Adding in dividend income over that time, holders of London’s blue-chips have enjoyed a very decent return.
I’m optimistic it’ll continue rising all the way to 2050. Here’s one particular large-cap I think could thrive over the period too.
Mining giant
Since it listed in London in 2008, precious metals stock Fresnillo (LSE:FRES) has risen 184% in value. That’s an annual average of 6.3%, and adding in dividend income, the miner’s generated a solid return for shareholders.
Mining stocks can be risky due to the range of operational issues they commonly face that can hit profits. Fresnillo has been hit by a series of issues across its Mexican operations, with worker strikes, declining ore grades, and faulty grid connections just a few problems that have impacted profits.
Yet its shares have still performed strongly thanks to rising gold and silver prices. A bright outlook for both metala suggests they could continue to thrive over the coming decades.
A golden era?
Analysts at WisdomTree, for instance, are tipping gold prices to reach record highs of $4,000 per ounce by 2030. The yellow metal was recently changing hands around $3,332, below the record around $3,500 struck in late April.
By 2050, prices are tipped to reach $9,100 an ounce. Both numbers assume “a continuation of current macro conditions“, the company says, supported by “moderate inflation, modest real growth, and persistent monetary expansion“.
However, WisdomTree also says prices could reach $5,500 and $18,800 per ounce in an era of “entrenched inflation, persistent deficit spending, and a growing loss of confidence in fiat currencies.” Given the huge deficits in the US and Europe, and with central banks steadily swapping paper currencies for gold, this isn’t outside the realms of possibility, in my view.
Where gold goes, silver may well follow, given its similar safe haven qualities. Though it could also struggle if the world economy suffers prolonged weak growth, impacting Fresnillo’s revenues.
Remember that broker forecasts — whether that be for shares, commodities, currencies or any other asset — are open to revision. However, in my book the broad bullishness of analyst estimates is an encouraging sign.
A top buy?
Given its considerable scale, Fresnillo appears well positioned to capitalise on this opportunity. It’s one of Mexico’s biggest gold producers and the world’s largest silver miner, producing 631,600 and 56.3m ounces of these metals respectively in 2024.
And it has a large and growing resource base that sets it up for the long term. Last year, positive exploration results at its Guanajuato, Lucerito and Candameña mines pushed attributable gold resources to 38.5m ounces, and silver resources to 2.25bn. The business is also looking outside Mexico to assets in Chile and Peru to strengthen its production pipeline.
While they’re not without risks, I think Fresnillo shares are worth serious consideration right now.
