Key Takeaways
- The gold rally is likely to continue in the new year, says Joachim Berlenbach of Earth Gold Fund UI EUR R.
- Selected mining stocks offer leverage and thus significantly more potential than physical gold.
- Stock selection is bottom-up based on geological and financial analysis.
Gold was one of the strongest asset classes in 2025. Driven by geopolitical uncertainties, high government debt and continued purchases by central banks, the price of gold reached record highs. Gold mining stocks also benefited from this environment, in some cases with significantly stronger price gains than the precious metal itself.
The Earth Gold Fund UI EUR R has achieved a return of 161% in 2025, making it the actively managed fund with the highest return on the German market in 2025. Joachim Berlenbach, founder and CEO of Earth Resource Investments, is responsible for the investment strategy and manages the fund with a clear focus on geology, fundamental analysis and risk management.
Antje Schiffler: In your view, what were the major drivers of returns on the gold market - and will the rally continue in 2026?
Joachim Berlenbach: The most important drivers were classic safe-haven purchases. There was a significant flight to gold, particularly from China, driven by the desire to move away from US dollar investments and US government bonds. This was compounded by purchases from central banks and private investors, especially in Asia. This demand has supported the price of gold.
Another key factor is the high level of global debt. In 2024, US government debt alone stood at around 124% of gross domestic product – and rising. This debt must be serviced in the long term, either through a weakening of the US dollar or through further new borrowing. Debt also remains a relevant issue in Europe and Japan. In this environment, gold benefits as a currency that cannot be increased at will.
In our view, demand is likely to remain high in 2026, especially as central banks have announced that they will continue to buy gold. It is difficult to make a concrete forecast for the gold price, but even with stable prices, producers’ margins remain at record levels, which is providing tailwinds for the mining stock sector. Overall, we continue to view the environment for gold as positive.
AS: Your fund does not invest in physical gold, but in shares of producers of gold and other precious metals. From an investor’s perspective, can you explain the difference between investing in physical gold and in the underlying shares?
JB: Gold is a currency, but not a fiat currency. It cannot be reproduced at will like the US dollar or the euro, for example, and in our view serves primarily as a stable store of value. At the same time, the gold market is sufficiently liquid, which distinguishes it from other precious metals. The physical silver market, for example, does not have the necessary depth to replace gold on a large scale.
Mining stocks are particularly interesting because of their leverage on the gold price. This effect is particularly pronounced among smaller developers who are building mines and exploration companies. If the price of gold rises by 10%, for example, the valuation of such companies – measured in terms of discounted cash flow – can change several times over. It is precisely this leverage that makes these investments attractive, but it works in both directions.
AS: What makes a company attractive to you?
JB: We analyse very carefully which of a company’s potential is not yet priced into its share price. This often involves geological or mining engineering aspects. If an ore body is high-grade and the environment is right – in terms of geopolitical risks, management quality and infrastructure, for example – we often invest before new drilling results are published. This gives us a time advantage over other investors.
One example is K92 Mining KNT in Papua New Guinea. I visited the project on site and examined the regional geology and the alteration zones in the rock. It became clear that the project has further potential.
Another example is Lundin Gold LUG in Ecuador. There, I worked closely with the project geologists, examined drill cores and analysed structural plans. The project is geologically complex, but it is precisely in situations like this that our strength lies: in evaluating complex deposit types at an early stage.
We have also closely monitored projects in Colombia, Serbia and Bulgaria, particularly in the copper-gold sector. In many of these cases, the market was slow to recognise the potential.
We develop our own models for the evaluation and discount the future cash flows. On this basis, we determine the intrinsic value of a project or company. If this is above the current market valuation, we see an investment opportunity.
AS: How do you deal with setbacks?
JB: One example is Aya Gold & Silver AYA. A speculative investor had expressed doubts about the so-called head grades, i.e. the ore grades, which initially put the share under pressure. This was not a cause for concern for us. As we know the company well and had visited Morocco ourselves, we took advantage of the weak share price and increased our position. The share price subsequently recovered.
Smaller stocks in particular often experience phases in which their value develops differently than expected in the short term. In such cases, we deliberately act cautiously. These positions are low-weighted, usually accounting for 0.5% to 1% of the fund volume, and serve as calculated risk capital. We achieve the most significant value contributions with our high-conviction positions in larger-cap companies in which we have particularly high confidence. These positions have performed positively as a result.
AS: So it’s a combination of geological and financial expertise. What else do you think is behind the fund’s success?
JB: Our portfolio is deliberately concentrated and usually comprises 35 to 45 hand-picked stocks. We don’t invest broadly, but with a high degree of conviction. We don’t think it’s very effective to manage funds exclusively from a desk. Instead, we go on site, examine drill cores and form our own opinion of the projects. In our view, this practical approach creates clear added value for investors, which is also reflected in the fund’s performance.
Although the fund is more expensive than many passive products, we are convinced that active management can offer a decisive advantage in this sector. In recent years, we have rarely seen investors question the fees – rather, the focus is on performance. We believe that active management is particularly useful in niches such as commodities and mining stocks. An ETF can track the market, but it cannot assess geological risks or analyse projects on site.
AS: What role does silver play?
JB: Silver is no longer just gold’s ‘little brother’. It is one of the key metals for renewable energies. Whether solar cells, wind turbines or electric motors – metals with high conductivity are needed everywhere. Silver has the highest electrical conductivity of all metals.
We therefore partially shifted positions from gold to silver stocks in the middle of the year. This decision has significantly boosted the performance of our fund, as silver has begun to outperform gold. Silver thus benefits not only from its monetary function, but also structurally from the energy transition as an industrial metal.
