Shares have more than doubled in 2025: Golden Prospect Precious Metals

GPM’s shares have more than doubled in 2025, but its portfolio still looks cheap…by Thomas McMahon

Overview

Golden Prospect Precious Metals (GPM) focusses on the small- and mid-cap segments of the gold mining industry, managers Rob Crayfourd and Keith Watson looking to take advantage of inefficiencies and use their in-depth knowledge of the people and assets in the business to generate alpha.

The trust has delivered excellent returns in 2025, up 114% at the time of writing in NAV total return terms. Last year when we initiated coverage we highlighted that miners had failed to respond to a multi-year rally in the gold price. In 2025 they have certainly responded, and rallied hard, but Rob and Keith stress that valuations remain highly attractive. The gold price has more than doubled since the rally began in 2023, transforming the economics for the producers. Yet the miners remain on cheap forward P/Es and attractive P/NAV valuations and the sector is yet to see significant retail inflows (see Portfolio).

In 2025 the managers have been mainly taking profits in their winners and rotating back into companies that hadn’t kept up with the rally. They continue to find opportunities, particularly in the smaller and earlier stage companies, which have flown under the radar so far. However, over the summer they did use some of the profits from sales to pay down debt, which proved prudent as the market sold off sharply in October.

GPM’s discount has come in over the year, but remains attractively wide in absolute terms at 12% at the time of writing, when compared to the fully diluted NAV. There are upcoming subscription rights, which will be exercised on 01/12/2025, which are in the money and should see the trust grow, pushing down costs – which have fallen significantly this year – further. In prior rights exercise periods the run up to exercise has sometimes seen the discount widen as some holders sell to fund their rights, presenting an opportunity to new investors looking for a discount.
 

Analyst’s View

Investors in GPM have to be pretty happy with how 2025 has turned out. A strong outlook on gold prices, falling cost pressures and increasing investor interest in gold and the miners has seen outstanding returns. It is perhaps not surprising to see the market take a breather as many investors, new and old, will have been sorely tempted to take profits. Looking at the market afresh, we think it continues to look attractive with many of the drivers remaining intact. High geopolitical tensions are leading emerging market central banks, particularly China, to switch reserves from US dollars to gold, and this could be a multi-year trend. Meanwhile, the fiscal situation of the UK and France is dire, while the US’s deficit of 6% of GDP is being ignored by investors pumping artificial intelligence-related stocks to eye-watering valuations. Despite all this, gold mining equities are still cheap, and offer another way to play the fundamentals supporting gold, while also being a potential sector to look to whenever the current technology bull market sees a pullback or worse.

We like GPM over an ETF for the ability to take on gearing, the ability for the managers to take advantage of a market with low analyst coverage, and Rob and Keith’s track record of outperforming in bull markets. It’s important to remember, though, that this is a volatile sector and GPM has a track record of feeling that volatility in full on the downside. This is likely to be an option for an investor with a high ability and high willingness to take risk.

Bull

• The sector continues to look cheap
• The outlook for gold looks strong in the medium term
• The discount, gearing and managers’ track record all argue for active exposure rather than passive

Bear

• The portfolio is concentrated and so has single stock risk
• The sector and GPM’s shares are volatile, and have seen considerable losses in past down markets
• Sentiment can drive the market rather than fundamentals

See the latest research on GPM here >

_Disclaimer

_{Disclosure – Non-Independent Marketing Communication}

_{This is a non-independent marketing communication commissioned by Golden Prospect Precious Metals (GPM). The report has not been prepared in accordance with legal requirements designed to promote the independence of investment research and is not subject to any prohibition on the dealing ahead of the dissemination of investment research.}