The price of gold bullion jumped 29 per cent this year and finished trading Friday around US$3,400 an ounce.Angelika Warmuth/Reuters
Canada’s benchmark stock index is outperforming both the S&P 500 and the tech-heavy Nasdaq Composite Index in 2025, and there is a single sector doing the heavy lifting: gold.
Despite the continuing tariff drama with the United States that disproportionately hurts Canada’s economy relative to the U.S., the S&P/TSX Composite Index is up 11.1 per cent since the start of the year, including dividends, while the S&P 500 has climbed 6.9 per cent and the Nasdaq has risen 7.3 per cent.
Multiple sectors have performed well on the TSX this year, but gold producers in particular are dominating, comprising 15 of the 20 best share price returns. These companies are led by Lundin Gold Inc. LUG-T, which has put up a 120-per-cent return, including dividends.
Gold companies also make up four of the top-five TSX performers, including Dundee Precious Metals Inc. DPM-T, SSR Mining Inc. SSRM-T, and Kinross Gold Corp. K-T: They all have total returns of at least 65 per cent since the start of the year. The only non-gold company in the group is Celestica Inc. CLS-T, a Canadian technology company that came back from the dead to strike it rich off the artificial-intelligence boom.
Opinion: How an unstable global order is affecting safe-haven assets
The driving force behind gold company returns is the soaring price for the underlying metal. Gold bullion has jumped 29 per cent this year and finished trading Friday around US$3,400 per ounce. That’s just shy of the record high of US$3,508 per ounce set in April, after U.S. President Donald Trump’s threatened tariffs against much of the world.
The reason the price of gold keeps rising is multifaceted, and the variables include: growing demand from central banks; fears of runaway fiscal spending in the U.S. after Mr. Trump’s budget bill added trillions of dollars to the deficit; and a trade war that is adding more uncertainty to the global economy.
“The most consequential, yet underappreciated, force behind gold’s ascent is stockpiling by central banks,” portfolio managers at iA Financial wrote in a recent report to clients. “According to the World Gold Council, central-bank demand reached a 30-year high in 2024, with emerging market institutions leading the charge. This shift isn’t a speculative bet; it’s a long-term portfolio reallocation away from fiat exposure.”
Fiat money is currency issued by a government that is not backed by a commodity. In other words, money that can be created or printed with the click of a button in the digital age.
“In an age of U.S. fiscal largesse, geopolitical multipolarity, and rising U.S. weaponization of financial infrastructure, gold is one of the few truly apolitical assets left on the planet,” the iA analysts said.
Tony Keller: Why the damage to Canada from Trump’s tariffs has been small (so far)
However, it’s more than a simple commodity story. Gold companies have delivered on their promises of fiscal discipline, keeping their production costs and debt levels low. That’s allowed their profits to flourish and for shareholders to reap the benefits.
Historically, whenever the bullion price would rise, producers would explore for more gold, creating a labour and equipment shortage that would send their costs soaring. At the same time, rising gold prices would convince gold companies to hunt for acquisitions of rival producers or explorers, sometimes adding billions of dollars worth of debt to fund the deals.
Bulking up often sounded good at first, but the gold price has historically had big swings, and downturns often came back to haunt companies. This was especially true after the commodity supercycle that ran from 2010 to 2012 collapsed, when many gold producers were saddled with debt.
During the current bull run, gold companies are much more focused on returning cash to shareholders in the form of dividends or share buybacks. Many have also been able to tame their expense growth.
Agnico Eagles Mines Ltd. is one of Canada’s best-known gold producers, and in 2015, it produced gold at an all-in sustaining cost, or AISC, of US$810 an ounce. (AISC is an industry metric that incorporates the majority of a miner’s expenses.) In the first half of 2025, Agnico’s AISC was US$1,235 an ounce – a 52-per-cent increase over the past decade.
Over the same period, the price of gold jumped to roughly US$3,400 an ounce, up from US$1,160 an ounce – a nearly 200-per-cent increase.
In other words, profits are soaring, and investors are reaping the benefits. And it just keeps getting better.
“Despite rising producer costs, margins are still expanding as gold prices increase,” analysts at RBC Dominion Securities wrote in a note to clients in July.