Quarterly Outlook
Q3 Investor Outlook: Beyond American shores – why diversification is your strongest ally
Jacob Falkencrone
Global Head of Investment Strategy
Investment Strategist
Gold hit a record at USD 3,547, up 34% year to date. The bid reflects expected September Fed cuts, questions over Fed independence, and a more fractured world. With long-end yields high and the dollar soft, bonds lost defensive appeal, shifting flows toward safe-haven commodities. Risks, however, remain: a hawkish Fed pivot, a sharp dollar rebound, a drop in long yields, or a positioning unwind. For the full run-down of drivers and challenge points, read: Gold breaks to fresh record as investors seek alternatives in a fractured world | Saxo. Silver finally cleared USD 40 for the first time since 2011. Platinum rallied through summer on China demand and supply discipline. For more, see: Silver powers past USD 40 to 14-year highs | Saxo. The common thread: softer real-rate expectations, steady central-bank buying, and silver’s tight balance from solar and electronics.
Real rates set the tone. When expected real yields fall, gold’s opportunity cost drops and demand improves. That bid often spills into silver and, with leverage, into miners. On fundamentals, silver’s industrial demand remains firm—photovoltaics, power electronics, and sensing—while mine supply grow slowly. Platinum has rebounded enough to lift many operations back above cash costs, but not enough to trigger new capacity. That supports prices.
Positioning then did the rest: with few bulls on and tight physical markets, even modest buying pushed prices through resistance. When metal prices rise, miner shares often rise more because costs move slower than prices, so profits swing harder. Read more in Ole Hansen’s latest COT note, COT report: Modest gold and silver longs fuel breakout momentum | Saxo.
AISC 101. All-in sustaining cost (AISC) wraps cash costs with sustaining capex and overhead. When prices outrun AISC, cash flow compounds fast—until it doesn’t. That is the essence of miner torque, earnings sensitivity to metal prices because costs move slower than prices.
Gearing 101. Gearing = financial leverage. Debt magnifies equity swings. Fixed interest costs make profits rise faster in upcycles—and fall harder in downcycles. In miners you get two levers: operating leverage (AISC vs price) and financial leverage (debt). Watch net debt/EBITDA, interest cover, maturity walls, and floating vs fixed rates. Low gearing cushions volatility; high gearing boosts “torque” but raises covenant and refinancing risk.
Metal ballast 101. “Ballast” = a stabiliser in a portfolio. Gold—and sometimes silver—tends to move differently from equities in stress. It pays no yield, so the “cost” is the foregone real return elsewhere. When real yields fall or the dollar softens, ballast strengthens. In policy or geopolitical shocks, bullion often falls less or even rises. That steadies total returns and gives you dry powder to rebalance.
A strong tape rewards operators that keep costs in line:
These are examples, not endorsements. Always re-underwrite mine-by-mine cost curves and jurisdiction risk.
Macro: The Fed decision on 17 September 2025 and the path of real yields—gold’s primary headwind or tailwind.
Micro: Q3 production updates from large gold, silver, and platinum (PGM) producers—watch grades, AISC, and sustaining capex.
Physical: Silver’s supply-demand updates and PV installation trends, including any “thrifting” of silver loadings.
Policy: Signals on Mexico’s permitting regime and South Africa’s power stabilisation—risk premia can change quickly.
Country risk is real. Mexico tightened the mining regime in recent years, lengthening permitting and adding uncertainty for silver-heavy portfolios. Peru’s periodic unrest can clog logistics. In South Africa, platinum-group miners remain exposed to power reliability and policy shifts.
Cost inflation persists in energy, labor, and consumables; it usually falls slower than metal prices in a pullback. Financing risk matters too. If prices wobble, equity and debt windows narrow fast for single-asset developers. The punchline: miners add diversification across macro factors, but concentration in a few countries can compound shocks.
Investor playbook
The case for precious miners rests on two engines: gold’s macro hedge, and cost-disciplined miners that turn high metal prices into cash flow. In 2025, falling expected real yields and tight supply did the heavy lifting. The main risks are jurisdiction and sticky costs. The main drivers are central-bank policy and silver’s industrial pull.
Near-term, the Fed’s call on 17 September and miner updates on costs and grades will steer the narrative. Blend stability with upside. Define the risk, then let consistency compound. Your balance sets both risk and reward. After a strong run, entry prices are higher, so pullback risk rises even if the thesis holds.