UBS: Gold trading is not considered "extremely crowded" Going to de-dollarization and currency devaluation support the demand for gold asset allocation.

UBS released a research report stating that by early 2025, gold has become a "market consensual long position" trade, with gold prices increasing by about 60% within the year (setting about 40 new highs in 2025). After the market began looking for the second and third derivatives of gold to obtain higher leverage (such as silver, platinum metals, and mining stocks), investor interest reached extremely high levels. The bank is becoming increasingly cautious about the short-term enthusiasm in gold trading. However, traditional indicators have not yet shown extreme crowding (COMEX net long positions and ETF fund inflows), reflecting that there is still a broad foundation of gold buyers. Despite strong momentum and to some extent a "crowded" position, the bank has not seen the conditions for a sustained downturn in gold. UBS believes that the logic of central banks continuing to purchase gold is still valid. Although most gold pricing models are currently "dysfunctional," the bank's strategy points out that the five gold bear markets over the past 50 years have all occurred under the following conditions: a strong US dollar, decreasing inflation or its expectations, rising economic growth, and reduced risk premium/uncertainty. Looking ahead to the next 6 to 12 months, the bank expects the opposite trends in the above situations and believes that the continued "de-dollarization" and "currency devaluation" trading themes will support the demand for gold as an asset allocation. After years of underperformance, gold stocks (GDX index) performed well in 2025, with GDX rising more than 100% within the year, outperforming gold by about 70%. Compared to the cyclical low points from the fourth quarter of 2024 to the first quarter of 2025, the market's future 12-month EV/EBITDA, immediate EV/EBITDA, and P/NPV valuation multiples for gold stocks have all been restored. In the bank's view, the risk-return profile of gold stocks is currently less attractive than it was at the beginning of 2025, but it is still too early to assert that the gold mining stock cycle has peaked. Currently, market expectations are still positive (based on an assumed gold price of $4,100 per ounce, an upward revision of about 20% for EBITDA in 2026-2027), with valuations generally moderate compared to the past 5-10 years, improving operational performance and reliability, record-high free cash flow for most stocks, strong balance sheets, most major miners showing capital discipline, increasing cash returns, and cautious capital expenditures and acquisitions. UBS stated that if gold mining companies can continue to rebuild investor confidence and trust, the bank expects earnings expectations to maintain upward momentum and provide further valuation expansion potential for some stocks. Gold stocks are currently priced below the spot gold price (about $4,150 per ounce). The bank stated that international gold mining stocks are not currently overvalued, and earnings momentum remains positive.