Fund managers see room for retail investors as metals drive 30% of TSX's year-to-date return
Gold now makes up 12 percent of the S&P/TSX composite index and has driven roughly 30 percent of its gains this year, according to Middlefield senior portfolio manager Dennis da Silva.
The Canadian Press reported that global market volatility and shifting trade policies are driving interest in safe haven assets, pushing Canadian equity markets ahead of the S&P 500. Fund managers suggest gold equities could still offer opportunity.
The TSX rose about 11 percent year-to-date as of Wednesday afternoon, while the S&P 500 gained roughly eight percent, as reported by LSEG Data & Analytics.
The divergence is largely attributed to the performance of gold and precious metals, which have surged approximately 30 percent this year, with the August contract trading around US$3,400 an ounce.
“In Canada, gold has been the huge mover,” said John Zechner, chair and founder of J. Zechner Associates, noting that gold now makes up 12 percent of the index and “has been the huge winner.”
He added that this is “the single most important reason why Canada has played such catch-up and has actually done better than the S&P 500, certainly this year so far.”
As per da Silva, the S&P/TSX global gold index is up 40 percent so far in 2025, and the performance of gold and silver names has accounted for nearly one-third of the TSX’s return.
He also pointed to increased demand for gold from central banks, which accelerated after the US and European Union froze Russian assets following its invasion of Ukraine.
The Canadian Press reported that Da Silva said it was a wake-up call for countries to realise their assets are not necessarily safe and could be frozen.
“That caused countries to re-evaluate how they hold foreign reserves,” he said, adding, “I think at that point that’s when we started to see pretty active buying.”
Uncertainty over trade policy has further boosted demand.
According to da Silva, the flare-up in the global trade dispute, particularly when US President Donald Trump imposed — and later delayed — tariffs on several countries earlier this year, added pressure to equity markets and pushed investors toward gold.
The Canadian Press said March and April were especially volatile periods for global equities.
Gold’s price movement is influenced by multiple factors including government deficits, inflation concerns, and trade uncertainty, said Chris McHaney, head of investment management and strategy at Global X Investments Canada.
While it’s difficult to isolate the dominant driver at any moment, McHaney added that the current combination of macroeconomic risks has supported gold’s position.
McHaney contrasted Canada’s performance with the US, where large-cap technology companies had previously powered market gains.
He said the “US exceptionalism story” has shown signs of fatigue. “I won’t say it’s run out of steam, but it has started to look like some of those drivers are starting to slow down in terms of the amount of growth that’s being provided to the US market.”
He pointed to a mixed picture among the so-called magnificent seven group of US tech giants.
While Nvidia and Microsoft shares are up about 27 percent and 20 percent respectively, Alphabet shares are flat, and Tesla shares have declined nearly 20 percent year-to-date.
“It really is more of a story of gold has been on fire and in Canada, we just have more exposure to that,” McHaney said.
Looking ahead, da Silva said it is unlikely gold will continue appreciating at its recent pace unless new economic or geopolitical shocks occur.
However, he believes gold companies remain a viable option for investors. “I don’t think it’s too late … I think history always shows if it’s a fundamentally strong sector. That is, they focus on costs and profitability per share. That’s an industry that can make good money over time.”
McHaney agreed, noting that some investors may feel they’ve already missed the upside. “There could be a psychological element of maybe ‘I missed that performance, I’ll just stay where I am,’” he said.
“We think gold itself might not keep rising in value, but it just has to stay kind of where it is now for the gold equities to continue to do very strongly.”
