Why Gold Beats Bitcoin & ASX Opportunities

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This story features GENESIS MINERALS LIMITED, and other companies.
For more info SHARE ANALYSIS: GMD
The company is included in ASX100, ASX200, ASX300 and ALL-ORDS

A blow-off top in gold’s parabolic rally is unsurprising. Analysts suggest the drivers of the rally to date are unchanged, and a sell-off provides opportunities in Australian gold miners.

• Parabolic rallies always see sharp pullbacks, eventually
• Macroeconomic drivers of the gold rally remain intact
• Sell-offs seen providing buying opportunities in gold miners
• Gold stocks to feature prominently in upcoming index rebalances

By Greg Peel and Rudi Filapek-Vandyck

On Monday, as the price of gold and silver were retreating in quick, violent fashion, SPI Asset Management Managing Partner Stephen Innes responded as follows:

Every market eventually asks the same uneasy question once price moves fast enough to rattle even the true believers. How high is too high? 

That question grew louder as gold surged through US$5500 and then abruptly face planted toward US$4500. The reflex is human. When an asset runs this far this fast and then snaps back violently, the conversation flips. Traders stop asking who is buying and start asking who is left standing.

Let me cut to the chase. Strip away the noise, and the price setter is clear. Central bank buying remains the force holding the market together.

Gold is not simply a momentum toy. It is a weight-based market pretending to trade like a screen asset. Supply does not flex on cue. You cannot ring a bell and summon new ounces next quarter.

When demand accelerates price is not celebrating. It is rationing. The tape moves higher because the market must raise the price of each marginal ounce to slow the flow of buyers. It’s supply and demand 101 all over again.

Think of gold less like a stock climbing a valuation ladder and more like a narrow bridge with a convoy surging onto it at once. Price rises not out of euphoria but out of necessity as the structure strains under the load.

At times, the bridge exacts a premium toll to ration passage. At others, the weight is mispriced, leverage stacks up, and the span gives way without warning, sending the most overextended vehicles straight through the railing.

The clean way to think about where that congestion clears is not sentiment but tonnage. Central banks are the price setters here. They write the check that moves the market. History is blunt on this point.

JPMorgan Chase’s Gregory Shearer and his team frame the question the right way, not in dollars but in tonnes. Their argument is simple and unforgiving. Gold supply does not respond on command. In the short run it is inelastic, which means price is forced to do the rationing when demand accelerates.

Unless the underlying appetite from investors and central banks cools, equilibrium is not restored by sentiment but by price rising high enough to shrink the tonnage those same flows can buy.

In their framework, that clearing price is far higher than most assume. The math shows that gold needs more than roughly 380 tonnes of quarterly demand from investors and central banks to sustain upside momentum, a threshold that barely changes even when stretched back to 2010.

Reframe the problem and the implication is stark. With notional demand running a little over US$100 billion per quarter, prices would need to rise toward the US$8000 handle and closer to US$8400 to compress tonnage below that historical breakeven.

Shearer is explicit that this is not a full model. It abstracts from jewelry demand, scrap supply, and potential shifts in official sector psychology. But the signal is clear. The air does thin at higher prices, yet the structure has not reached the point where it collapses under its own weight.

As long as central banks and large investors keep writing checks at this scale, gold is not topping. It is still being rationed.

That does not mean gold must go there. Markets are not contracts with destiny. It does mean the current rally is not some self-collapsing tower built on enthusiasm alone.

The air does thin as prices rise. Jewelry demand bends. Scrap supply around the world wakes up. But the structural spine of this move has not yet snapped under its own weight.

This is the part traders often get wrong. They confuse altitude with exhaustion. Height feels scary, but what matters is whether the engine is still pulling.

Right now, the engine is tonnes, not tweets. Until those tonnes meaningfully slow, gold is not topping. It is still clearing the bridge one expensive ounce at a time.

The punchline is simple and deeply uncomfortable. Gold is not expensive because it looks expensive. It is expensive because central banks remain size buyers, largely indifferent to price.

China Chose Its Shelter

The market did not flinch because Kevin Warsh might chair the Fed. It flinched because the sugar rush finally met a cold room. This was not a philosophical sell-off. It was the sound of excess leverage being asked to show its passport.

Gold and Bitcoin were treated as twins until the tape forced a separation. Both live off liquidity. Both thrive when money is cheap and certainty is scarce. But when the weather turns, they do not seek shelter in the same places. One looks for a vault. The other looks for a socket.

The Warsh whisper mattered not because of policy detail but because of tone. Balance sheet skepticism is not a footnote. It is a ceiling. When the market senses that the Fed’s punch bowl may be pulled back before the room sobers up, assets priced on infinite patience are the first to stagger.

Gold did not escape the stumble. It never does when leverage is flushed. But its fall was gravity, not exile.

Bitcoin’s drop told a different story. It was not simply repricing liquidity. It was losing sponsorship. The myth of digital gold was tested when real money needed somewhere to hide. And when the door closed, it did not knock on the blockchain. It walked down the hall to bullion.

The reason sits east of the screens most traders watch. Liquidity is not a single river. It is a delta. Where it originates matters. In China, money is still being printed with intent, not apology. Deposit rates have been crushed.

Yield has evaporated. Savings are being asked to accept erosion quietly. And when households are denied crypto, they do what households have done for centuries. They buy weight.

Gold does not need to perform. It needs to exist. In an environment where cash yields are being starved, and policy leans toward stimulation, a non-yielding asset becomes a store rather than a sacrifice. That is why gold rallied earlier while Bitcoin sulked.

One was plugged into Chinese balance sheets. The other was plugged into American liquidity cycles.

This is the irony of the debasement trade. Investors swear they have abandoned the old safe havens, yet they still follow the same money trail their grandparents did.

They may shout about decentralization, but when real savings are on the line, they obey gravity. And gravity points to where new money is born and where it is allowed to flow.

As the year turns, a wall of Chinese savings faces reinvestment with nowhere to earn and few places to run. If even a slice of that capital chooses gold, recent weakness will read as a clearing storm, not a regime shift. Corrections cleanse. They do not dethrone.

Bitcoin does not enjoy that luxury. It lives closer to the fuse. When liquidity tightens, it bears the brunt of the impact first. A harsher season awaits it, not because the story ended, but because the audience changed.

UBS Is Equally Bullish

On January 30, UBS noted the gold price had now broken well over US$5,000/oz “as the underlying strategic rationale looks stronger than ever”.

UBS upgraded its gold miner price forecasts and earnings, forecast a 2026 year-end gold price of US$5,600/oz and lifted gold price estimates by 11-12% over 2026-27 to US$5,200/oz and US$4,800/oz respectively.

The timing was unfortunate. The following two sessions saw the gold price crash -20% (silver -33%).

To give UBS its due, the analysts did note “gold feels a ‘consensus long’ trade and we remain cognisant that no bull market lasts forever”. In other words, no surprise if there is a pullback.

UBS believes the macro logic for gold remains robust and does not see the set-up for a bear market in 2026.

The analysts see the logic for sustained buying from central banks, despite higher prices, and note while most gold models are currently “broken”, the five gold bear markets in the last 50-odd years occurred during periods of: (1) increasing economic growth; (2) reducing inflation/expectations; (3) stronger USD; (4) reduced risk premia/uncertainty.

UBS expects the opposite of these variables over the next six-twelve months and believes this, combined with ongoing de-dollarisation/debasement trade, will sustain asset allocations to gold.

On the miners, the analysts see strong balance sheets (mostly net cash), with growing cash positions, as miners look to organic growth options that look increasingly accretive given where prices are now.

UBS expects organic growth to gain focus this year, alongside continued returns from the miners.

The suggestion is the precious metal sell-off was triggered by Trump’s announced appointment of Kevin Warsh as new Fed chair come May, when Jerome Powell’s tenure ends. Warsh, unlike other potential candidates, is well respected by Wall Street.

Whereas a Trump puppet may have attempted to drive down US rates (notwithstanding there are twelve votes on the Fed committee, not one), Warsh is seen as less likely. We hope.

However, it is agreed Warsh was not worth a -20% two-day fall in the gold price. Every market (and particularly commodities) that “goes parabolic” ultimately ends in tears.

Warsh may have been a trigger, but scenes on the news of everyday Australians queuing for hours outside bullion dealers should have been warning enough, and no doubt someone, somewhere, was given a “buy gold” tip by a cab driver.

Just a Flesh Wound

Buyers have already begun to move back into gold.

UBS believes risks remain skewed to the upside in the face of ongoing global uncertainty and expects gold to continue to benefit from shifts out of US assets.

Interest has heightened across institutional and retail investors and the strength of demand has (so far) more than offset any attempts to take profits, said UBS in unfortunate timing.

So far that assessment no longer holds true.

Physical demand had also been holding strong –- UBS noting this is in line with seasonal patterns (strong demand from China ahead of Lunar New Year holidays), although this was nevertheless surprising considering the extent and pace of the price rally.

The key drivers for UBS remain geopolitics/ongoing trade tensions and the modest outlook for global growth and de-dollarisation, but also gold offering an alternative to fiat currencies.

Perth-based research house Argonaut expects further volatility in both the gold spot price and its Australian gold miner coverage universe in coming weeks.

In Argonaut’s view, this will likely create an opportunity to increase holdings in preferred names.

Argonaut favours stocks with strong organic growth and the capacity to deliver upside to that outlook. Preferred picks remain Genesis Minerals ((GMD)), Capricorn Metals ((CMM)) and Westgold Resources ((WGX)), with all three producers offering the potential to deliver upgrades to guidance outlooks during 2026.

Greatland Resources ((GGP)) is removed from the list post a strong share price outperformance.

Catalyst Metals ((CYL)) continues to look the cheapest stock to Argonaut on a value basis, boasting a forecast total shareholder return over 100%.

The analysts also look to Bellevue Gold ((BGL)) to continue to re-rate as the company delivers improved operating performance and repays its hedge book.

In large caps, Argonaut favours Northern Star Resources ((NST)) over Evolution Mining ((EVN)), given the former’s ability to deliver the Kalgoorlie Consolidated Gold Mines (KCGM) mill expansion the key catalyst.

More Bullish Updates

Sector analysts at stockbrokerages Morgans and Shaw and Partners have also responded to the sudden correction in pricing for precious metals by re-affirming their positive views.

Morgans continues to expect underlying price strength for gold, supported by a favourable macro and structural demand backdrop including:

• Diversification away from USD-denominated reserves by central banks
• US fiscal deficits and sovereign debt levels continue to undermine confidence in long-term USD purchasing power
• Persistent inflation risk and structurally higher cost bases support gold’s role as a long-term inflation hedge
• Elevated geopolitical and political instability is sustaining safe-haven demand

Analysts at Shaw view volatility in global gold and silver markets as an opportunity to increase holdings in preferred names.

Their favour lays with producers with strong organic growth and developers with capacity to bring on near-term production.

In Gold, Shaw’s preferred picks are:

• Genesis Minerals ((GMD))
• Ramelius Resources ((RMS))
• Santana Minerals ((SMI))
• Magnetic Resources ((MAU))
• Golden Horse Minerals ((GHM))

Shaw’s most preferred silver exposure is Boab Metals ((BML)).

Morgans has separated its sector preference by company size:

• Among large caps, Newmont Corp ((NEM)) is preferred over Northern Star ((NST))
• Among mid-caps, Ramelius Resources ((RMS)) is most preferred
• Among small caps, the broker favours the strong production outlook at Catalyst Metals ((CYL))

Are also Buy-rated at Morgans:

• Meeka Metals ((MEK))
• Pantoro Gold ((PNR))
• Regis Resources ((RRL))

Index Implications

Canaccord Genuity points out post sell-off moves in gold miner share prices may not be straightforward.

While the recent share price weakness in gold stocks may ultimately prove short term, many of the current ASX100 and ASX300 addition candidates are gold names.

As such, there may likely be notable share price moves in these candidates as index-related buying by quant funds, which had been positioning ahead of potential inclusion, might now reverse.

While any relative underperformance may be temporary over a longer-term horizon, it is an important dynamic to be mindful of over the coming weeks, Canaccord suggests.

Over the medium term, larger-cap gold stocks that ultimately miss ASX100 inclusion could become attractive following a potential period of underperformance.

Westgold Resources, Greatland Resources, Regis Resources ((RRL)) and Vault Minerals ((VAU)) are all screening for addition into the ASX100. Greatland, Regis and Vault would cease to screen if their share prices were to fall by circa -3% and remain there for the balance of the calculation period, Canaccord points out.

If this were to occur, several days of index buying which has likely already taken place would need to unwind. With only around one month remaining until the announcement, this could be material and drive short-term volatility in these names.

With neither Lendlease ((LLC)) nor Telix Pharmaceuticals ((TLX)) currently screening as “Strong Removal” candidates, their removal risk is solely dependent on the number of “Strong Additions”, Canaccord notes.

As such, if two fewer Strong Addition candidates emerge, both stocks may remain in the ASX100.

Canaccord views recent movements in gold stocks as largely irrelevant to the potential addition and removal outcomes for the ASX200 (and ASX50 and ASX20) at the upcoming March rebalance.

Other Impacted Stocks

The ASX300 is a different matter.

In order of risk, Santana Minerals ((SMI)), St Barbara ((SBM)) and Meeka Metals ((MEK)) are the key names to watch, according to Canaccord.

Should these stocks fall, Chrysos Corp ((C79)), Peet ((PPC)) and Navigator Global Investments ((NGI)) could begin screening for inclusion. Among these, Peet is seen as the key stock to watch, with a potential addition implying 11 or more days of trading volume required to be bought.

Qualitas ((QAL)) could also screen for addition, though with relative liquidity of 29% versus the 30% threshold it would require higher trading volumes to qualify.

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