The stock market’s been red-hot in 2025, buoyed by… well, Trump’s tariffs not being as bad as they could have been. In fact, the market’s so hot in places, notably the US, I’m holding more cash than usual.
Beneath this market exuberance lies a growing risk of a market correction or downturn. Hence my cash holding. And when equity markets falter, investors often turn to gold as a safe haven, driving the precious metal’s price sharply higher.
The rationale’s clear: gold historically thrives in periods of uncertainty, inflationary pressures, and geopolitical tensions. These are conditions that remain prevalent today.
In fact, gold prices have surged over 30% year-to-date, reaching a new psychological barrier above $3,000 per ounce, with some forecasting $4,000/oz into 2026.
Central bank buying, ETF inflows, and de-dollarisation trends underpin the bullish outlook, setting the stage for gold and its miners to potentially outperform if stocks retreat.
However, if this red hot stock market takes a nasty turn, the outlook could become even more bullish.
Gold miners are already winning
Against this backdrop, gold mining stocks have already outperformed many sectors, but there could still be room to run.
Among the key London-listed gold stocks, Fresnillo (LSE:FRES) could be an attractive proposition to consider. With a market capitalisation approaching £11bn, Fresnillo is Mexico’s largest precious metals producer and a major player in both gold and silver markets.
The company’s solid operational discipline and cost controls have contributed to vastly improved operational performance. Adjusted revenue rose 27% to $3.6bn, while gross profit more than doubled to over $1.2bn. Naturally, this was helped by improving gold and silver prices.
Fresnillo benefits from exposure to rising gold prices but also enjoys diversification through its significant silver production. This dual commodity exposure helps smooth revenue volatility.
Although the recent production challenges at its Sabinas mine warrant monitoring, the company’s strong balance sheet and focus on efficient operations position it well to navigate potential challenges.
Management’s indicated a willingness to return capital to shareholders as growth projects mature, suggesting the potential for dividends or buybacks that could add further appeal to investors.
Room to run
Smaller gold producers like Greatland Gold and Hochschild Mining have posted impressive gains in 2025, buoyed by rising gold prices. And if gold continues its upward trajectory amid macroeconomic uncertainty, Fresnillo and its peers could outperform the broader market.
Ironically, the company’s with the weaker balance sheet may perform best if gold rises further. The new price environment fundamentally changes the value proposition for some gold miners.
Personally, I believe I need to do some more research into these individual stocks before making a decision. However, I certainly believe there could be value in holding more gold-focused investments in my portfolio.
Despite this, I’m aware of that these stocks could plummet if gold reverses. It requires close monitoring. The rewards however, could be great. If gold goes up, it could beat the market.
