Gold’s Next Phase: Balanced Solutions for Upside and Yield

After months of consolidation, gold prices are showing signs of breaking higher. Technical indicators point towards this momentum shift, and the backdrop is supportive.

Indeed, heightened geopolitical tensions, fragile global trade relations, and persistent central bank gold buying continue to underpin demand. Foreign central banks now hold more gold than US treasuries for the first time in 30 years. At the same time, the Fed remains on the path of monetary inflation with rate cuts, ongoing liquidity injections, and accommodative stance in general - while fiscal policies add fuel with tax cuts, massive public spending, and heavy issuance on the short end of the curve.

Gold miners' revenues are directly tied to gold prices, while costs (labor, energy, consumables) are relatively fixed. This means that when gold rises, profits expand faster than the metal itself. In today’s environment, where average all-in sustaining costs are in the $1,450–1,600/oz range, miners benefit significantly from record-high prices above $3,400/oz. They also face more volatility, but this is precisely what makes them attractive as underlying for structured products: it allows to benefit from a beta play on the yellow metal while preserving capital in adverse scenarios.

In contrast, royalty/streaming companies generate gold-linked revenues without carrying the burden of rising operating costs. Their model - collecting a share of production or revenue in exchange for upfront financing - remains highly profitable even if inflation drives mining costs higher. As a result, their share prices tend to be more defensive, with lower beta to gold compared to miners. This resilience makes them especially well-suited for income-oriented structures, enabling investors to earn attractive coupons while keeping downside risks under control.