Brian Laks has been investing in gold stocks for over a decade. To the deep-value investor, they serve as a hedge against volatility in the rest of his portfolio, a haven during geopolitical uncertainty and deliver steady returns.
Yet that all changed for one simple reason: Gold misbehaved last year. After bullion prices, along with related shares, started trading like meme stocks and surged to records, Laks began cutting Old West Investment Management’s exposure to the group.
The Los Angeles hedge fund and other asset managers like Tuttle Capital Management and Purpose Investments Inc. have been rotating out of gold miners and finding shelter in other corners of the equity market.
“Gold’s not the same trade that it was 10 years ago,” said Laks, Old West’s chief investment officer.
As the ongoing war in Iran and US President Donald Trump’s social media rhetoric rattles equity markets, investors are desperately seeking stability and protection from uncertainty. Yet, gold has consistently defied its safe-haven status, slumping since the start of the conflict. A NYSE gauge of miners is down 31%, while the S&P 500 Index has gained 8% since the end of February.
Gold stocks have been falling on news of escalating conflict in the Middle East, only to rally the moment headlines signal hostilities are easing. Just this week, gold miners fell 4.8% on Wednesday after Trump vowed to resume strikes on Iran and attack “ very hard ,” then rebounded the next trading session on the president’s about-face decision to cancel airstrikes, saying peace negotiations made progress. The stocks ended Friday 3.6% higher on reports that the US and Iran is moving closer to an interim peace deal.
Earlier this year, Tuttle Capital had about 15% of its actively managed fund in gold- and silver-related stocks, but since the war began, the firm reduced exposure to 5%, according to Chief Executive Officer Matthew Tuttle. The company has balanced some of the volatility with the so-called high asset and low obsolescence or HALO trade, referring to businesses that are less vulnerable to disruption from new artificial intelligence tools.
Inflation trade
A perennial issue with investing in gold mining stocks is that the underlying commodity itself, gold, is generally considered an unpredictable asset, though not quite in the same way as meme stocks or other speculative bets. This is because the metal’s value is highly sensitive to investor sentiment and macro-economic factors such as interest rates and inflation expectations.
Gold stocks have been weighed down by a sharp rise in energy prices this year and increased fears of rising inflation, which could result in the Federal Reserve hiking interest rates — a negative for non-yield bearing assets like gold. Higher prices also mean increased input costs for gold producers. As a result, some gold stock investors are making investment considerations based on inflation expectations.
“At this point in time it’s being used more as an instrument for speculators to bet on short term moves in interest rates,” said Gabelli Gold Fund associate portfolio manager Chris Mancini, adding that he has seen very little flows into and out of his firm’s fund over the past three months.
“Investors are pretty much frozen and waiting to see how this all plays out,” he said.
But while some investors are waiting it out, others are selling. Following inflows at the start of the year, the VanEck Gold Miners exchange-traded fund saw three consecutive months of outflows since the war began. After a year of large gains, gold stocks offered easy liquidity, VanEck product manager Andrew Musgraves said.
A contrarian bet
The transformation of gold stocks into a so-called risk-on asset started in 2025. After years of underperforming the broader equity market, the price of the commodity started rallying at a gravity-defying, meme-stock-like pace, buoyed by a weak dollar and increased demand from central banks around the world.
Last year, gold clocked a 65% jump in price, while the NYSE index tracking gold miners climbed 155%, the biggest annual surge ever. Shares of miners like Newmont Corp., Barrick Mining Corp. and Agnico Eagle Mines Ltd. rose at least 116% in that period. Earnings for these companies also saw large growth as costs remained under control.
While Purpose Investments is maintaining its holdings in large mining operators with low costs like Barrick, the asset manager is turning to utilities stocks for shelter, according to portfolio manager Derek Benedet.
Meanwhile, Tuttle said his firm increased its exposure to energy and utilities by 5 percentage points because they are unlikely to be disrupted by AI. And Old West is putting money into copper and natural gas stocks because their underlying assets are used in data centers and are expected to see price growth from the AI boom, according to Laks.
“To be interested in gold right now, you have to have a bit of contrarian-leaning,” Benedet added.
To be sure, this isn’t the first time gold stocks performed counterintuitively in recent years. Miners fell at the onset of the Covid-19 pandemic, recovered and eventually rallied. So some investors are hopeful that this time around, the fundamental case for gold will return.
“When all of this noise dies down, it’s easy to see the market sort of looking to gold miners again,” Musgraves said. “I think people will probably continue to see that and hopefully come back.”