The FTSE 100 is having a remarkable year. By yesterday’s close (16 December), the usually-pedestrian index was up over 17% in value. That’s an even better performance than the tech-heavy S&P 500 across the pond!
But this solid showing pales in comparison to the return generated by one of its companies.
I’m talking about silver and gold miner Fresnillo (LSE: FRES).
All that glitters…
Even the most laid back of investors can’t have failed to notice that precious metals prices have been galloping upwards in 2025.
Silver has hit new highs due to huge industrial demand and dwindling supply. The gold price has also been going through the roof thanks to concerns over low economic growth and rising unemployment, not to mention ongoing geopolitical tension. The suggestion that we might be in the midst of an AI-related bubble has also pushed investors to seek out safe havens for their cash.
This has clearly played into the hands of the UK-listed but Mexican-based miner. Fresnillo is the world’s largest producer of silver. It’s also one of the latter’s largest gold diggers.
As one might expect, this demand has resulted in some excellent recent financial results from the company.
The shares have soared
Collectively, all of the above has pushed the Fresnillo share price up by almost 350% this year. That’s the sort of return we might see in a highly-speculative penny stock!
Put another way, £5,000 invested as markets opened up last January would be worth around £22,500 now. I don’t know about anyone else but that’s the sort of performance that would have me popping the champagne corks this Christmas.
But the good news for holders doesn’t end there. In addition to the mightily impressive capital gain, the company has also returned a total of 66.5p per shares in dividends in the last 12 months.
If gold and silver prices rise further and production doesn’t falter, it doesn’t feel silly to say that this FTSE 100 stock’s purple patch might continue.
Buyer beware
As wonderful as Fresnillo’s form has been, it wouldn’t be Foolish if we didn’t devote a bit of thinking space to what might go wrong.
We only need to look back to April to see how quickly things can unravel. Back then, President Trump’s tariff tantrum sent stock prices sharply lower.
Even if something similar doesn’t happen in 2026, Fresnillo is continually exposed to a fair number of risks, including changes in laws, environmental pressures, operational obstacles and cost inflation.
Without wishing to state the obvious, it also has no control over the prices of what it produces.
All this needs to be borne in mind given the shares are currently trading on a fairly frothy price-to-earnings (P/E) ratio of 25.
I’m bullish… for now
I tip my hat to anyone who had the courage or luck to buy Fresnillo shares at the start of 2025 (or pretty much any time during the year).
Although the likelihood of this gain being repeated in 2026 must surely be very small, I’m inclined to think that the price could go even higher in the months ahead.
But it’s certainly not the only stock I think could do well again next year.
