Why gold, silver and lithium still have room to run

It’s been a bumper few months for metals – both the shiny ones and the grey, industrial ones. Geopolitical tensions have stoked metals prices, and created supply/demand imbalances. Fund managers in this part of the market suggest that the rally could have further to run, with mining companies yet to catch up with metals prices. 

The precious metals surge

The rally in precious metals has been well documented. Since the start of the year, gold is up 27%, silver 32% and platinum 49%*. Each area has had idiosyncratic drivers. The gold price, for example, has been boosted by weakness in the dollar, fears over US fiscal profligacy and central bank buying. Silver has been boosted by growing industrial demand, and a widening gap between supply and demand. Platinum saw supply constraints, and growing Chinese demand. 

More recently, other metals have been rallying too, including lithium and rare earths. This has been driven by geopolitical disruption and protectionism, plus supply shortages in key areas. Georges Lequime, manager on the WS Amati Strategic Metals fund, says: “The whole mining sector seems to be waking up. Rising geopolitical tensions between the US and China are bringing a focus on the supply side risks for metals.” The Trump administration is imposing a range of tariffs on metals, from aluminium to gold bars to rare earths. 

Georges adds: “There is also a recognition that to achieve AI ambitions, we will need huge metal-intensive data centres. This is happening against a backdrop of global monetary reset. That is negative for all fiat currencies, but particularly the US dollar. That favours gold and silver prices.” Despite this favourable backdrop, most diversified funds still have low exposure to this part of the market, he says.

Gold equities lag the metal

Georges remains overweight gold and silver companies, which comprise 67% of the fund*. The gold price has taken a pause, after its recent rally, stabilising between $3,300 and $3,400**, but he believes gold producers still have some way to go to catch up with recent gains. Corporate earnings have been very strong. 

He says there has been some disbelief in the gold price rally and analysts have only just started to adjust their forecasts. They are generally building a gold price of around $2000-$2500 into their assumptions. “This is perplexing.” Equally odd, he says, have been the outflows from gold funds. “Previous rallies have generally seen aggressive buying of gold equities.” 

Evy Hambro, manager of the BlackRock World Mining Trust, agrees: “We see an exciting outlook for gold producer earnings and margin expansion and it is our largest sub-sector exposure today. The gold price has risen substantially and looks well-supported by structural drivers: inflation eroding the purchasing power of fiat currency, high government debt necessitating lower yields and rising geopolitical risk. 

“We have also seen a step-change in gold demand from central banks which we expect to remain net buyers. Despite recent strong performance from gold equities, they still appear unloved amongst generalists and look attractive in our view relative to gold and their historic valuations.”

Silver’s industrial story 

Ned Naylor-Leyland, manager of the Jupiter Gold and Silver fund, sees a similar situation with the silver miners. There is a significant supply deficit, as industrial demand increases. He says: “Over 60% of the silver supply goes to industry use: electronics and technology including advanced batteries, solar panels, plasma screens and increasingly, medical and military applications.

“Industrial demand for silver rose 4% in 2024 to 680.5 million ounces, reaching a new record high for the fourth consecutive year; silver demand exceeded supply last year, also for the fourth consecutive year, according to the Silver Institute. This silver shortage is manageable until it isn’t. There is no stockpile, as there is with gold. The price of silver has gained in line with gold over the first six months of the year.”

As has happened with gold, there have been outflows from silver mining ETFs in recent quarters – “a demand trend which I find baffling,” says Ned, adding, “the companies are simply performing too well at the operating level to be ignored any longer.”

Lithium’s market revival

The past few months have been characterised by a rally in certain industrial metals as well. Particularly notable has been the turnaround in the lithium market. Georges says: “The lithium market has been under enormous pressure. It is starting to come alive after the closure of two lithium mines in China. The market remains in over-supply in the short term, but the quantum is relatively small.” He believes it is plausible that the market could go back into a deficit. Supply is predictable, with lithium prices currently too low to incentivise new supply. At the moment, the market is being driven by short-covering of lithium stocks, but it is an area he is watching closely. 

He says geopolitical tensions between the West and China are being felt most acutely in the rare earths sector. These are metals such as scandium and neodymium. They are used in sophisticated magnets critical to modern robotics, electric vehicles, wind turbines, drones and high tech weaponry. China controls 91% of refined rare earth production, creating an acute global supply chain risk. 

Georges says recent export controls by Beijing have already triggered shortages. The US government has recently taken a controlling stake in specialist mining group MP Materials, and sought to guarantee a higher purchase price for rare earths to incentivise exploration***. This is likely to support prices in this part of the market. 

Copper feels like tariff pain

Nevertheless, there are parts of the market struggling with the tariff regime. This has been seen in the sliding copper price, which is down 20% over the past month*. This follows Trump’s announcement that he would impose a tariff of 50% on copper imports. Evy says: “The US had imported around 600kt of copper year-to-date to get ahead of these tariffs, so expectations that part of this will flow into the international market contributed to the spot copper price declining.” Nevertheless, copper is still a vital part of the electrification story and should have longer-term support once the market adjusts to the tariff regime. 

This is an interesting part of the market, often overlooked by investors. It may have further to run as ongoing geopolitical tensions drive earnings for mining companies. 

*Source: Trading economics, metal prices at 18 August 2025

**Source: Goldprice, at 19 August 2025

***Source: Amati Global Investors, metals vlog 15 August 2025