Gold Stocks Shine Amidst Uncertainty

Gold prices remain near historic highs despite a hotter-than-expected US producer price index (PPI) reading in July. Royalty and streaming companies report record results, fueled by inflation concerns, a softer US dollar, and central bank demand. Gold-backed ETFs add $3.2 billion in July, raising total assets under management to a month-end high of $386 billion. Government policy changes are a precursor to change, and the PPI jump may suggest companies are passing on higher import costs related to tariffs.

Title: Gold Prices Hold Steady Despite Hotter-than-Expected US PPI; Royalty and Streaming Companies Report Record Results

Gold prices have remained near historic highs despite a hotter-than-expected US producer price index (PPI) reading in July. The yellow metal has continued to attract buyers in an uncertain environment, driven by factors such as inflation concerns, a softer US dollar, and central bank demand.

The PPI, which measures prices producers receive for goods and services, jumped 0.9% in July from the previous month and 3.3% from a year earlier, marking the largest monthly increase in three years [1]. The core PPI, which strips out volatile food, energy, and trade services, advanced 2.8% compared to the same months last year. The biggest driver was services, which rose a full 1.1% last month. This could suggest that companies are passing along higher import costs related to tariffs, something Goldman Sachs recently projected could hit consumers’ wallets in a big way by the fall.

Despite the PPI report, gold’s resilience in the face of mixed data has been notable. Spot prices have been consolidating in the mid-$3,300s after hitting an all-time high of $3,500 an ounce in April and reaching $3,439 as recently as July 22. The metal’s steady performance this summer has been fueled by a number of factors, including inflation concerns, a softer U.S. dollar, central bank demand, and the expectation of lower interest rates. Gold also tends to shine brightest during periods of uncertainty, whether economic, political, or geopolitical. This year, that list has been long: renewed tariff skirmishes, questions about the Fed’s independence, and elevated levels of global debt have all driven investors toward hard assets.

According to the World Gold Council (WGC), gold-backed exchange-traded funds (ETFs) added $3.2 billion in July alone, raising total assets under management (AUM) to $386 billion, a month-end high. Global flows are now on pace for the second-strongest year on record, following 2020.

Royalty and streaming companies have been a standout performer in the gold sector. These firms provide upfront financing to miners in exchange for the right to purchase a portion of future production at a fixed, often heavily discounted, price. This model has several compelling advantages, including lower risk exposure. Royalty and streaming firms have no direct operating costs, meaning they’re insulated from rising labor and fuel prices. Their portfolios often span multiple mines and jurisdictions, and they’ve also demonstrated strong cash flow.

The June quarter and first half of 2025 were nothing short of spectacular for the big names in the royalty and streaming space. Franco-Nevada reported record revenue of $369.4 million for the quarter, up 42% year-over-year. Operating cash flow surged 121% to a record $430.3 million, while net income more than doubled to $247.1 million. Wheaton Precious Metals likewise delivered all-time highs in the second quarter, generating $503 million in revenue and $415 million in operating cash flow. Triple Flag Precious Metals, a relative newcomer compared to its larger peers, posted record operating cash flow per share and announced its fourth consecutive annual 5% dividend increase since its IPO in 2021. These results demonstrate why royalty and streaming companies have been gaining market share in investors’ portfolios. They combine the potential for capital appreciation with consistent income, an attractive mix in a yield-starved world.

Traditional gold miners are also benefiting from the metal’s strength. UBS analysts recently upgraded their outlook on the sector, noting that after years of underperformance, miners are rebuilding investor trust through disciplined capital management. If gold prices remain steady, UBS sees the potential for increased stock buybacks, accelerated growth projects, and more merger and acquisition (M&A) activity.

Government policy changes are a precursor to change, and the PPI jump may suggest companies are passing on higher import costs related to tariffs. Goldman Sachs has been clear that the tariff burden is shifting from businesses to consumers. Their models suggest that by the fall, about two-thirds of the cost of recent tariffs will be borne directly by U.S. households. This is already showing up in the PPI’s services component and could feed into consumer prices later this year. For investors, this creates a tricky environment. On the one hand, higher inflation readings could prompt the Fed to slow the pace of rate cuts, which might limit gold’s upside in the near term. But on the other hand, persistent inflation—and the potential for policy missteps—reinforces gold’s role as a hedge.

History shows that gold has often performed well in periods of negative real interest rates, when inflation outpaced nominal yields. If tariffs and other factors keep inflation elevated while the Fed is easing, we could see that dynamic play out again. Strong central bank demand, steady ETF inflows, and robust free cash flow generation from royalty and streaming companies all point to continued strength in the gold space. For investors looking to participate in this trend, we believe these companies offer an attractive balance of growth potential, income, and risk management.

References
[1] https://www.usfunds.com/resource/royalty-and-streaming-companies-lead-gold-sector-with-record-results/