UBS says buy gold miners Endevour, Barrick and Franco-Nevada
Gold prices hit a new high of $3,127 (£2,416) earlier today, taking gains over the past week to 3.2 per cent as investors flocked to the safe haven amid increasing concern about the economic risks of US president Donald Trump’s tariffs.
However, analysts at UBS have argued that miners, not gold, are the better buy.
Indeed, miners have begun to outperform the precious metal for the first time in a while. The Vaneck Gold Miners ETF has outperformed gold prices by 20 per cent during 2025.
This is in sharp contrast to the last five years, when the miners have underperformed the price of the precious metal by around 40 per cent.
UBS analysts noted that since gold miners also offer potential growth and dividend income, they should theoretically outperform gold during a period of strong performance.
Gold, on the other hand, offers no income or growth potential.
David Morrison, senior market analyst at Trade Nation, argued that gold was likely reaching the end of its rally, given it “hasn’t had a significant pullback in over four weeks”.
“It feels as if the air is pretty thin up here above $3,100,” he added.
However, miners face headwinds from inflation, persistent pressure to replace depletion and grow production, and most of all, credibility.
“After years of generally missing guidance, it is difficult to have conviction that the gold sector will hit its targets and restore investor confidence,” said UBS analyst Daniel Major.
But after the recent gold price rally, there’s scope for earnings outperformance, UBS noted.
Currently, miners trade on an average price-to-earnings (p/e) ratio of 15, compared to 21 only four or five years ago.
“With consensus earnings momentum likely to remain positive, aggregate guidance more realistic and valuations close to cyclical lows, we continue to see attractive risk vs reward in the gold miners,” Major added.
He pointed to large miners like Endevour as primed for growth in 2025 after what he described as “a tricky 2024,” when its chief was fired after an “irregular payment instruction” entered his accounts.
The analyst also highlighted Franco-Nevada due to its near-term growth and diversification prospects from streaming and royalties.
Meanwhile, mining giant Barrick Gold could benefit from the restart of its operations in Mali.
“A restart in Mali should act as a positive catalyst for the stock, and we believe country/delivery risk is sufficiently priced-in,” said Major.