View from the Observation Deck

Today's blog post highlights the disparities that often exist between the equity returns posted by mining companies and the spot price performance of physical gold and silver. Since precious metals tend to be priced in U.S. dollars, we also included a column that tracks the relative strength of the U.S. dollar against a basket of other major currencies.

• Precious metals have historically been considered potential inflation hedges by investors. From 1926-2024, the 12-month rate of change on the Consumer Price Index (CPI) averaged 3.0%, according to data from the Bureau of Labor Statistics. It stood at 2.7% at the end of July 2025, down from its most-recent high of 9.1% set in June 2022, but up from its most recent low of 2.3% in April of the same year.
  
  
• The price of gold has been surging, setting multiple record highs. The spot price of one ounce of gold stood at a record $3,586.69 on 9/5/25, up 42.51% year-over-year (y-o-y).
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• The spot price of silver has also increased by a considerable amount, surging by 41.87% in 2025 alone (thru 9/5). That said, unlike gold, the spot price of silver has not recovered to its all-time high. The price of one ounce of silver stood at $41.00 on 9/5/25, 17.08% below its all-time high of $49.45 set on 1/18/80.
  
  
• The spot price of the U.S. Dollar Index declined by -9.88% YTD through 9/5. 
  
  
• From 2010 through 2024, the Philadelphia Stock Exchange Gold & Silver Index posted a positive total return in seven of the 15 calendar years. Six of them occurred from 2016 through 2024. It has increased by a staggering 92.22% YTD (see table), marking the first time since 2019 that it outperformed both gold and silver spot prices. 

Takeaway: While continued tariff trepidation and a spate of mixed economic data offer one explanation for the stunning YTD returns posted by the safe haven assets in today’s chart, we don’t think they tell the whole story. Notably, the dollar’s devaluation deepened since our last post, with the U.S. Dollar Index’s price return reflecting a decline of 9.88% YTD (thru 9/5) compared to -4.05% YTD thru 3/21 (data from our last post on this topic). We think this development reflects investor’s concerns over the Federal Reserve’s (“Fed”) upcoming policy decision next week. Should the Fed decide to cut interest rates in September, it would do so despite inflation’s recent uptick from 2.3% in April to 2.7% in July. Additionally, the Fed has consistently touted 2% as its goal for the metric, and we’re not there yet. Demand for gold as an investment has been seemingly insatiable. The World Gold Council reported that global demand for gold stood at a record 4,975 tons in 2024. Of that total, 1,180 tons were held for investment purposes, up 25% y-o-y. Notably, 477 tons of gold were purchased for investment purposes in Q2’25 alone, representing an increase of 78% y-o-y. We expect the recent surge in the value of safe haven assets may continue if global risks to stability persist.

The chart and performance data referenced are for illustrative purposes only and not indicative of any actual investment. The index performance data excludes the effects of taxes and brokerage commissions or other expenses incurred when investing. Investors cannot invest directly in an index. There can be no assurance that any of the projections cited will occur. The Philadelphia Stock Exchange Gold & Silver Index is a capitalization-weighted index comprised of the leading companies involved in the mining of gold and silver. The U.S. Dollar Index (DXY) indicates the general international value of the dollar relative to a basket of major world currencies. The Consumer Price Index (CPI) is a measure of the average change over time in the prices paid by urban consumers for a market basket of consumer goods and services.

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