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Gold has risen to record levels in the past year, helped by demand from exchange traded funds that track the yellow metal. Yet the bigger winners have been investors in the companies that mine gold, rather than those who invest in the precious commodity itself.
China’s largest mining company Zijin Mining Group is an example. As gold, copper and silver prices hit records, Zijin’s estimated net income rose nearly two-thirds to Rmb52bn ($7.4bn) last year. Its shares more than doubled in 2025, giving it a market capitalisation of $130bn. It is now projecting double-digit growth in gold and copper output for the current year.
Gold miners have not always been such straightforward bets. Even during times when gold prices rose, mining stocks have often lagged, weighed down by high costs or aggressive expansion strategies including large acquisitions. Miners often hedge their exposure to prices, which protects them when they fall, but reduces their upside when prices rise.
Miners have considerable operating leverage, which means that small changes in revenue can turn into large changes in profit. So when gold prices rise faster than costs and production continues expanding, those that have only hedged to a limited degree find that increases in the gold price flow almost directly to their bottom line. Zijin’s operating margin for the year to September was 18.5 per cent, nearly 8 percentage points higher than two years ago.
Stronger margins give miners the ability to reinvest. Zijin plans to increase mined gold output to 105 tonnes and copper production to 1.2mn tonnes this year. It aims to reach its 100-tonne annual gold target two years ahead of schedule thanks to acquisitions in Ghana and Kazakhstan and expansion at the Julong copper mine in Tibet, a politically sensitive region where Chinese miners are most comfortable operating. In other words, a mineral-rich area that is difficult or inaccessible for western peers.
Risks remain. Commodity prices can fall as quickly as they rise, leaving miners exposed when sentiment turns. Yet the current gold rally reflects continued buying by central banks, especially in emerging markets, and a repricing of monetary risk amid high debt levels. New gold supply remains constrained as new mines take longer to approve and build. In this cycle, the companies that mine the metal are the prize that glitters more.