Gold (GCZ25) prices, which just a few days ago were seen rising past $5,000 per ounce, have crashed and fallen below the $4,000 level. Amid the crash, gold mining companies, which were enjoying the rally of a lifetime, outperforming the precious metal by a wide margin this year, have fallen hard.
In my previous article, I noted that it made sense to book profits in Anglogold Ashanti (AU) after the stock had more than tripled in value this year. The stock is now nearing bear market territory, which by definition is a drawdown of 20% from the peak. In this article, we’ll examine whether AU stock is a buy after the recent crash.
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Like any other mining company, AU’s outlook is driven more by the underlying commodity than by any company-specific factors. While gold has been rallying for the last two years, the last leg of the rise had all the ingredients of a FOMO rally. Gold looked ripe for a correction, and the yellow metal has pared gains even as it’s still outperforming the S&P 500 Index ($SPX) this year. I see the recent fall in gold as a healthy correction and don’t expect the prices to fall much below the $4,000 level.
Meanwhile, the long-term story for gold remains intact. The following are the structural bullish drivers for gold.
De-dollarization: Central banks globally have been on a de-dollarization drive, which hit a key milestone when their collective gold holdings recently surpassed their U.S. Treasury holdings for the first time in three decades. While the U.S. dollar is still the largest reserve asset, gold has surpassed the Euro to claim the second spot in central bank holdings. Central banks have collectively bought over 1,000 metric tons of gold in the previous three years, and the buying spree has looked unstoppable in 2025 also. It is not only the usual suspects like China that are ditching Treasuries for gold, but traditional U.S. allies that are hoarding gold. For instance, Poland – which is the biggest gold buyer this year – has said that it would increase gold’s share in…
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