Ask the Manager: Frank Holmes on Finding Opportunity in Gold’s Rally

Welcome to Ask the Manager, ETF Central's series where we sit down with top experts, analysts and portfolio managers to dive into the latest investment trends, market updates, and economic insights.

We recently chatted with Frank Holmes, CEO and CIO, U.S. Global Investors, about gold’s surge to record highs in 2025 — and why the metal’s safe-haven appeal remains as strong as ever.

Escalating trade tensions have pushed the price of gold to record highs in 2025. Help us understand gold’s “Fear Trade” and why the yellow metal’s safe-haven history is part of this overall story.

I estimate that gold’s Fear Trade represents approximately 40% of all gold buying. For years now, central banks have been net buyers of the precious metal, with most of the purchasing done by emerging economies such as China, Russia and Turkey as they seek to diversify away from the U.S. dollar.

Historically, gold has helped investors and institutions preserve their wealth in times of economic and geopolitical uncertainty, and it’s doing precisely that right now as the administration’s on-again, off-again tariff policy rattles global markets.

Gold bullion is moving higher, but what about gold stocks? In particular, the miners. How are they faring so far this year?

Gold miners are behaving as you’d expect in a gold bull market. The NYSE Arca Gold Miners Index, in fact, is performing nearly twice as well as physical gold. Many producers that have reported financials for the first quarter are reporting record revenue and profit, even after a historic quarter at the end of 2024.

How much gold (whether in bullion or a fund) should an investor hold in their portfolio, in your opinion? And why?

It’s all about the 10% Golden Rule. My recommendation has always been that investors maintain a 10% weighting in gold, with 5% in physical gold (bars, coins, jewelry) and the other 5% in high-quality gold mining equities. It’s important to rebalance at least once a year. Gold won’t make you rich, necessarily, but our research shows that it can improve a portfolio’s Sharpe ratio, or its risk-adjusted returns.

The GOAU ETF is focused specifically on gold royalty names and gold miners. Can you help us understand the concept/definition of “royalty” and streaming companies, and why they are the sole focus of this ETF strategy?

It’s helpful to think of gold royalty and streaming companies as specialized financiers. They enter into a contract with an explorer or producer, putting up upfront cash in exchange for a royalty or an agreed-upon “stream” of produced metal.

We like these companies because they’re run by exceptional money managers. They provide exposure to gold while reducing a lot of risks that traditional producers face, including capital costs, operating costs and environmental costs.

Most royalty and streamlining companies carry little to no debt, and there’s very little overhead relative to producers, meaning they’re generating millions of dollars in revenue per employee.  

What are the top 2-3 holdings in GOAU and what qualifies them to hold these higher weightings?

The top three holdings in GOAU include Franco-Nevada, Wheaton Precious Metals and Royal Gold. The gold royalty and streaming model is only around 40 years old. Franco-Nevada was the first to be founded in 1983 by my mentors Seymour Schulich and Pierre Lassonde.

Since going public in 2007, shares of Franco have delivered a remarkable CAGR of around 16%. That’s well above the NYSE Arca Gold Miners Index, which has a CAGR closer to 1% over the same period.