Gold SWOT: Dollar Concerns Bolster the Outlook for Further Gains

Frank Holmes

Strengths

The strongest-performing precious metal over the past week was palladium, which rose 5.30% amid persistent supply constraints in South Africa and Russia. At the same time, shares of South African precious-metals miners are heading toward their best month on record. The FTSE/JSE Precious Metals and Mining Total Return Index jumped 38% in August, putting it on track for its strongest monthly performance since records began in 2006. AngloGold Ashanti, Pan African Resources and Gold Fields have each climbed more than 40% month-to-date, underscoring strong investor momentum across the precious-metals mining sector, according to Bloomberg.

Gold ETFs recorded their largest inflow since October 2025, with $7.3 billion flowing in during the week ended Aug. 26, according to BofA, citing EPFR Global data. Gold is on course for its biggest monthly gain this century after rising nearly 14% in August, according to Bloomberg, helped in part by a U.S. Treasury intervention in the bond market that revived the debasement trade. That mix of strong inflows and policy-sensitive demand has kept gold closely tied to shifts in market confidence and currency expectations.

China’s gold accumulation may be significantly larger than official figures indicate. China is estimated to have acquired 88 tons of gold through the London OTC market in May and June, including roughly 40 tons in June, compared with the 15 tons officially reported for the month. The buying comes as Beijing reduces its U.S. Treasury holdings and expands gold reserves, reinforcing the broader trend among central banks toward diversification into physical bullion.

Weaknesses

The weakest-performing precious metal for the past week was silver, which fell 4.65% after Fed Chair Kevin Warsh emphasized the need to bring inflation back to the Fed’s 2% target. Spot gold and silver declined 3% and 4%, respectively, following his Jackson Hole speech on Friday morning. Zhaojin Mining also reported weaker-than-expected gold production. First-half attributable net profit rose 10% year-over-year (YoY) to RMB1.58 billion, but first-half earnings were only 30% of full-year market consensus estimates, with UBS citing lower-than-expected gold production and investment losses. The softer production results highlight how operational execution can matter even in a strong bullion backdrop.

Gold’s elevated valuation relative to Treasuries raises the risk of reversion. Bloomberg Intelligence warns that gold could face a prolonged period of underperformance after its surge above $5,000 an ounce in the first quarter (Q1). Gold’s premium relative to long-term U.S. Treasury bonds has reached its highest level since 1987, suggesting stretched valuations and increasing the risk of a potential reversal.

Sibanye Stillwater also posted production and earnings that fell short of expectations. South African gold production came in 5% below UBS estimates, while U.S. platinum group metal (PGM) production was 4% below forecasts. EBITDA from both businesses also missed expectations, reflecting weaker operational performance across key precious-metals assets, according to UBS.

Opportunities

Agnico Eagle Mines agreed to invest C$57.2 million, or approximately US$41.5 million, for a roughly 10% stake in Radisson Mining Resources, providing funding for underground exploration at Radisson’s flagship Quebec gold project. According to Dow Jones, the investment brings backing from a major gold producer and could help advance exploration and unlock additional value at the project.

Dollar concerns are strengthening the outlook for further gold gains. Crédit Agricole expects gold to return to $5,000 an ounce by year-end and extend gains into 2027, citing concerns that U.S. policies could further undermine confidence in the dollar. Continued pressure on the greenback could reinforce demand for gold as an alternative store of value, especially if investors continue to seek assets less exposed to currency debasement risk.

Northam Platinum could benefit from competitive merger and acquisition (M&A) interest. Northam received an unsolicited approach from a major South African platinum group metal (PGM) producer regarding a potential asset- or corporate-level transaction. The company plans to engage additional potential counterparties, a move Morgan Stanley believes could create a competitive bidding process and help maximize transaction value for shareholders.

Threats

Thailand is considering a new low-rate tax on certain gold transactions, potentially including imports, as authorities seek to curb money laundering and improve financial oversight. The Finance Ministry plans to consult with the Gold Traders Association. Any new tax could raise transaction costs and weigh on domestic gold activity.

Gold Fields faces uncertainty over the renewal of its Tarkwa mining leases in Ghana. The company said it will not “just roll over” in negotiations with Ghana’s government over leases set to expire in April. Bloomberg previously reported that the government may consider transferring the leases to local parties, creating uncertainty over Gold Fields’ continued control of the mine.

Illegal gold mining is surging in Peru as record prices fuel illicit activity. Illegal gold exports reached an estimated $11.5 billion in 2025, up 55% from the prior year and more than six times the level a decade ago. The expansion poses growing environmental, regulatory and supply-chain risks for Peru’s formal gold industry, according to Bloomberg.

About the author

Frank Holmes

Frank Holmes is the CEO and chief investment officer of U.S. Global Investors. He purchased a controlling interest in U.S. Global Investors in 1989 and became the firm’s chief investment officer in 1999. In 2006, Holmes was selected as mining fund manager of the year by the Mining Journal, and in 2011 he was named a U.S. Metals and Mining "TopGun" by Brendan Wood International. In 2016, Holmes and portfolio manager Ralph Aldis received the award for Best Americas Based Fund Manager from the Mining Journal. He is also the co-author of The Goldwatcher: Demystifying Gold Investing.

More than 30,000 subscribers follow his weekly commentary in the Investor Alert newsletter, which is read in more than 180 countries. Under his guidance, the company’s mutual funds have received recognition from Lipper and Morningstar, two independent financial authorities.

In 2015, Holmes led the company into the exchange-traded fund (ETF) business with the launch of the U.S. Global Jets ETF, which invests in the global airline sector. In 2017, U.S. Global Investors made a strategic investment in HIVE Blockchain Technologies, listed in Toronto, and Holmes was appointed non-executive chairman of the board.

Holmes received the Huron Medal of Distinction from Huron University College in 2013, his alma mater for the class of 1978. The award recognizes individuals whose life achievements set an example of excellence and reflect Huron’s arts and social sciences missions.

He is a native of Toronto and a graduate of the University of Western Ontario with a bachelor’s degree in economics. He is a former president and chairman of the Toronto Society of the Investment Dealers Association.

Holmes is a frequent keynote speaker at national and international investment conferences. He has spoken at the Investing in African Mining Indaba conference, the Denver Gold Group’s European Gold Forum and numerous Money Show events, and has joined panels with prominent industry leaders including the editor of Barron’s. He continues to speak at conferences throughout the U.S., Canada and overseas.

Holmes is also a regular commentator on CNBC, Bloomberg, BNN and Fox Business, and has been profiled by Fortune and The Financial Times. His views on gold appear weekly on a program called Gold Game Film in collaboration with Kitco News and TheStreet.com. He was also featured in Barron’s during the commodity rally at the start of 2004 and is a regular contributor to Forbes, Business Insider, Seeking Alpha and Wall Street Journal’s Experts Corner.

Frank Holmes has been appointed non-executive chairman of the Board of Directors of HIVE Blockchain Technologies. Both Holmes and U.S. Global Investors own shares of HIVE, directly and indirectly. This interview should not be considered a solicitation or offering of any investment product.

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