The Price of Gold and AI-led Chip Rally in 2025
The comments below are an edited and abridged synopsis of an article by Muflih Hidayat, Discovery Alert
In 2025, gold stocks have delivered a remarkable performance, outpacing the much-hyped AI investment boom by a wide margin. According to a recent report by Discovery Alert, the MSCI Global Gold Mining Index surged about 135% year-to-date, while the global semiconductor index climbed roughly 40% in the same period. This substantial gap signals that the price of gold and related equities are far more than just defensive plays; they’re beating thematic growth trades.
Why the price of gold and gold stocks are surging
Several key drivers explain why the price of gold and gold-mining stocks are outperforming:
- Central-bank accumulation: Governments worldwide are increasing gold reserves as they diversify away from the US dollar and strengthen safe-haven positions.
- Valuation appeal in the gold-mining sector: Gold miners are trading at around 13 × forward earnings, compared to roughly 29 × for semiconductor firms. This relative affordability, combined with a rising gold price, offers margin expansion potential.
- Macro tailwinds: Expectations of interest-rate cuts, declining real yields, inflation worries, currency risk and geopolitical uncertainty are enhancing gold’s attractiveness.
Gold vs. AI stocks: Different narratives, same portfolios
The dramatic outperformance of gold stocks compared to AI chip plays provides an insightful contrast. While AI remains a powerful long-term theme, its current valuation is stretched, and investor sentiment may have raced ahead of fundamentals. In contrast, the price of gold is being driven by structural demand and genuine scarcity, not simply speculation.
What this tells Canadian investors
For Canadian investors, the gold narrative highlights an important strategic consideration: the price of gold can still move significantly even when other sectors dominate headlines. Gold and gold stocks offer both portfolio diversification and downside protection when macro conditions shift. The recent outperformance suggests that maintaining allocation to gold exposure remains relevant, not just as a hedge but as a growth-oriented component under certain conditions.
Investment implications & caution
While the rally in the price of gold is compelling, investors should keep several factors in mind:
- The rebound in gold stocks has already been dramatic: The price of gold and related equities may experience corrections and volatility.
- AI and semiconductor sectors still offer long-term growth potential, so investors don’t necessarily need to choose one over the other: A combined allocation may improve risk-adjusted returns.
- No asset class is immune to structural risks: The price of gold could face headwinds if interest rates rise, or if mining stocks fail to maintain margins and production.
A NOTE FROM BMG
The Opportunity for Gold
The current market climate presents a compelling opportunity for gold investors. As the price of gold remains supported by central-bank demand, fiscal uncertainty, and growing distrust in fiat currencies, gold continues to prove its resilience. With inflationary pressures lingering and real yields trending lower, the price of gold is positioned to strengthen further through 2025.
Institutional accumulation is another bullish signal. Central banks and sovereign wealth funds are expanding their holdings as they diversify away from the US dollar and hedge against global currency depreciation. This structural shift provides long-term support for the price of gold, independent of short-term market sentiment.
For individual investors, gold offers more than a safe haven; it provides portfolio insurance against systemic risk. While AI and technology sectors rely on continuous innovation and speculative earnings growth, the price of gold is driven by tangible scarcity and universal acceptance. Historically, gold has maintained its purchasing power through recessions, political upheavals, and monetary resets.
As the global economy adjusts to slower growth and demographic headwinds, the price of gold could emerge as a leading performer once again. For those who missed the early stages of this rally, there remains a meaningful window to participate through physical bullion, structured gold funds, or select mining equities with disciplined cost management and solid balance sheets.
In short, the opportunity for gold lies in its timeless role as both a preserver of wealth and a potential growth asset in a world searching for stability.
