“Diversification is the only free lunch”

November was another strong month for the funds, driven by continued momentum in the metals and mining sector. We are delighted to note that silver has reached new all-time highs, and several of the AuAg-funds are now trading very close to their respective peak levels. Interest in the theme continues to grow, both among existing and new investors, as reflected in the persistently strong inflows.

Au and Ag during the previous month

Gold closed the month at USD 4,230 (4,001 USD), rising a solid +5.72%. This leaves the price only 3.55% below its all-time high, and we eagerly await to see where gold will end the year.

After shaking out many momentum-driven funds, highly leveraged investors, and so-called “weak hands” – in other words, retail investors who entered the trend late – gold’s rally has regained momentum. With stronger hands stepping in to absorb the selling, combined with global stimulus measures, it may not be long before the market sets its sights on the next “big” level: USD 5,000. Several major banks have already set this as their target for 2026.

Silver ended November at USD 56.44 (48.59 USD), delivering an even stronger month than October with a remarkable +16% rise. Silver also set a new all-time high during the final trading session of November, reaching USD 56.50 per troy ounce amid a strong bull surge.

Measured in the weakened US dollar, silver is now up +95.2% year-to-date. In SEK and EUR, the gains are smaller at +66.6% and +74.2%, respectively. Silver has therefore delivered significantly better returns than gold so far this year, a clear sign of strength in the ongoing move towards a lower Gold-Silver Ratio (GSR). We are now just below 75:1 and approaching our first intermediate target of 70:1.

Be prepared for increased volatility in silver going forward. Not just +6% swings like during the last day of November, but also double-digit moves – in both directions – on the way towards a three-digit silver price. The physical silver shortage we witnessed in London in October may flare up again in December, potentially driving new all-time highs. As we like to say, it’s exciting all the way to the finish line.

Mining companies producing gold and silver have also significantly outperformed the underlying metals this year. AuAg Silver Bullet has returned +132.5% in SEK, compared with +66.6% for silver itself. Even so, there is substantial upside left in the miners, as the market is often slow to price in new sustainable levels for gold and silver.

As we have noted previously, temporary fluctuations in commodity prices have relatively limited impact on valuations within the mining sector. What truly matters are long-term average prices, as these eventually determine corporate earnings. Investors in the broader equity market remain hesitant to treat current metal prices as new long-term averages. This creates an opportunity for those willing to believe – as we do – that this is merely the beginning, and that mining stocks can still be bought at considerable discounts. This phenomenon, combined with a future rotation of capital from bonds into gold and from equities into the mining sector, will be a powerful structural driver for many years to come.

The AuAg Funds - Highlights

During a relatively muted month for the broader equity market, the AuAg funds, which focus on gold and silver mining companies, once again stood out, rising by +15% and +18%, respectively. These are equity funds with very low co-movement with “traditional” equity funds. Their co-movement (correlation) with the Stockholm Stock Exchange is modest, ranging from 0.15 to 0.20, making the AuAg funds strong complements in any diversified portfolio.

AuAg Silver Bullet, known as “Europe’s riskiest fund”, has a volatility above 40, compared with approximately 20 for the broader equity market. Yet, an 80/20 mix – with 20% allocated to AuAg Silver Bullet and 80% to SIXRX – has exhibited lower volatility than a 100% equity allocation, measured by SIXRX (the Stockholm Stock Exchange, including dividends), ever since the fund’s launch six years ago.

Moreover, this 80/20 mix has also delivered superior returns, with a gain of +123.92% compared to the Stockholm Stock Exchange’s +85.77% (measured from the launch of AuAg Silver Bullet). The combination of lower volatility and the fund’s high-octane return potential, +201.41% since inception, represents a compelling case for including mining equities in every equity portfolio.

Global perspectives with AuAg

In January 2024, we stated that central banks speak far too much. Two years later, the Federal Reserve continues to communicate with the explicit aim of “guiding the market”. Following its latest meeting, where it decided to cut rates, the Fed stated that a further cut in December was less likely. Several members have echoed this message in public remarks, while others have taken the opposite view and argued in favour of another reduction more recently. The market, which tends to take every word at face value, has swung from a 90% probability of a cut down to 30%, and is now quickly returning towards the 90% level again. One could reasonably describe it as complete chicken chaos.

Additionally, the Fed has decided to end QT, which means it will stop reducing its balance sheet. When the Fed eventually needs to act to bring down long-term rates, which drive the cost of servicing the United States’ enormous debt burden, it will have no choice but to employ QE, i.e. quantitative easing. When that moment comes, it will send gold and silver prices soaring – something we will write more about in our forthcoming Outlook for 2026.

Hmmm… Perhaps we should reconsider publishing an Outlook at all. Many felt our forecast of +26% for 2025 was far too optimistic at the time:

“Our forecast for 2025 is that gold will deliver another very strong year, similar to 2024. We expect gold to break through the major level of 3,000 during the year, and to finish higher, with 3,300 seen as a realistic target (+26 per cent).”

In hindsight, our forecast missed the mark by a wide margin, now that gold stands at USD 4,230 per troy ounce, up +61%. This is precisely why we are asset managers in the first place: we operate with the conviction that the long-term trend of monetary inflation will continue. As a result, short-term annual forecasts are not central to our philosophy. Nevertheless, we promised an outlook in January – and it will be delivered. You can expect a gold price target above USD 5,000.