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What FTSE 100 stocks might benefit from the gold boom? The gold price is undoubtedly on the up. The price has risen around 50% in the last year. Trillions of dollars in value has been added.
There are many who look at macroeconomic conditions and believe that gold will continue rising over the coming years and decades. The UK and specifically the FTSE 100 contains many stocks that might benefit from this trend, too. Here is the lowdown on what might happen, along with what might the best stocks to benefit.
Optimism?
The primary reason to think gold could continue its surge upwards is fiscal discipline – or rather, the lack of it. The UK is running a massive deficit on spending, is borrowing billions of pounds every month, and has a debt-to-GDP ratio increasing in a manner reminiscent of the Napoleonic wars. Many other developed countries (including the US) are in a similar predicament.
What’s to be done with this ticking time bomb? The optimistic scenario (and the one the government is gunning for) is we get lots of GDP growth in the years ahead. This would reduce debt in percentage terms to more manageable levels. Given the UK has been in a ‘per capita recession’ for most of the years since 2008, this looks very optimistic indeed.
The pessimistic scenario probably involves either budget cuts, tax rises, or inflation via money printing. Given the recent surge in the price of gold, it seems like the markets are expecting the last of these.
Protection
Stocks do provide reasonable protection against inflation. Moreover, many companies listed on the London Stock Exchange mine gold too. This provides the best of both worlds if the currency becomes more devalued.
One stock that has been doing gangbusters recently is gold and silver miner Fresnillo (LSE: FRES). The firm operates a handful of mines in South America with a strong focus on ‘safe haven’ metals. The rise in asset prices has done wonders for the share price, up 241% since the turn of the year. It’s the FTSE 100’s top performer in 2025.
One disadvantage to owning such stocks is the impact of uncontrollable market forces. Gold has been surging recently, but what if we’ve hit a plateau? A fall in the price of the yellow metal could lead to mediocre returns even if the underlying operations of the company are thriving.
For those keen for exposure to gold, one advantage is that Fresnillo can be bought or held through brokerages and ISA accounts. Holding a stock in an app offers more physical security than storing gold somewhere in your house, where it might get stolen or lost.
All in all, I think this is one to consider as we head into more uncertain times. I intend to rebalance my own portfolio a little in the near future, and Fresnillo is a stock I may be adding.
