Last year, we began adding gold and silver mining companies to the Up Capital Model portfolios. I give credit to the client, Annie Alexander, who first introduced the idea of miner stocks to me early in 2025 as a developing, favorable asset class. We ultimately decided to add gold and silver miners to Up Capital Model portfolios in the second quarter of 2025. This decision was driven by a combination of strong price momentum and persistent negative media narratives that have pushed more investors toward precious metals. There are three primary reasons investors typically allocate precious metals to their portfolios, which include:

• Hedge against inflation

• Increased demand driven by increased utilization

• Hedge against President Trump

Let's unpack each of these motivators:

1. Hedge Against Currency Decline

The US Dollar (USD) currency held remarkably well during the 2020 pandemic. Since 2020, USD has remained the dominant stable world currency up to the start of 2025.

Last year, President Trump initiated a broad effort to renegotiate tariff policies with more than 90 countries. The trading agreements with many of these countries have remained largely unchanged since the end of World War II. U.S. and international equity markets reacted with sharp volatility and declines as investors panicked, selling risk assets amid fears of disruptions to the global economic order.

By April 9, 2025, investors recognized that global markets were not deteriorating as feared and returned to equities. Despite the poor start and continued concerns about tariff policies, U.S. equity markets delivered strong performance, with the S&P 500 rising 17.99% and the NASDAQ gaining 21.77%, including dividends.

However, while the US stock market rebounded in 2025, the U.S. dollar weakened as investor confidence in the U.S. economy eroded. In early 2025, hedge funds and private equity firms began reallocating currency exposure away from the U.S. dollar and into foreign currencies, putting downward pressure on the dollar’s value. As a result, the USD declined 8.63% in 2025 relative to other major currencies.

Meanwhile, gold and silver rallied as fears of slowing global economic growth and inflation intensified. The environment in 2025 created an ideal opportunity to reduce U.S. dollar exposure and rebalance into precious metals purchased with USD. That repositioning delivered exceptional results, with spot gold prices rising 75.3% and silver surging an impressive 202.8%!

Owning physical gold and silver bars presents clear logistical and custody challenges for Up Capital, while precious-metal derivatives such as options and futures introduce elevated risk and volatility. As a result, we focused on adding gold and silver mining companies, which offer the additional advantage of increasing operational profits as metal prices increase.

Mining equities in 2025 provided a compelling triple benefit of (1) a declining U.S. dollar, (2) rising precious-metal prices, and (3) expanding profitability from mining operations. This strategy performed well throughout 2025 and has continued to deliver positive results into 2026.

Below is a chart highlighting some of the key mining companies added to our model portfolios during 2025. Please note that Up Capital began adding mining stocks in the second quarter of the year; however, the chart reflects performance beginning January 1, 2025, for comparative purposes.

2. Hedge Against Inflation

Like their role as a hedge against a declining U.S. dollar, precious metals can also serve as a hedge against inflation. This is particularly true when inflation is driven by rising commodity prices. While individuals are not purchasing gold or silver bars to replace U.S. dollars for everyday expenses, investors often allocate to precious metals in anticipation that metal prices will rise faster than broader commodity costs.

During the early stages of the 2020 pandemic, investors sold gold and silver mining stocks alongside most other asset classes. As the year progressed, investor responses to mining equities diverged. Over the two-year period ending December 31, 2021, performance among major mining companies varied significantly. Some delivered strong gains, such as Gold Fields (+71.8%), Endeavor Mining (+75.1%), Hecla Mining (+55.5%), and Kinross Gold (+25.9%), while others finished the period with negative returns.

The point is precious metals, and miners are a volatile sector. Prior to the start of 2025, the long-term returns of these same mining stocks have varied results going back to 2012. During this period, mining stock performance ranged from +163.7% to -98.9%. My experience is the precious metal market, and miners are short-term holds and require close attention to changing momentum to exit with profits.

3. Hedge Against President Trump

Investor interest and momentum in precious metals reemerged in early 2025, driven largely by the start of President Trump’s second term. Based on his first term, investors anticipated an unconventional and rapid approach to policy implementation, raising concerns that certain initiatives could be perceived as disruptive to the U.S. economy.

Regardless of one’s political views, many observers agree that President Trump’s governing style is markedly more aggressive and unconventional than that of recent administrations. As a result, U.S. equity markets experienced heightened volatility throughout 2025, challenging investors’ ability to forecast economic growth and corporate earnings with confidence. Media coverage further amplified uncertainty, with frequent headlines and dire projections following each new policy announcement or Truth Social post.

Today, U.S. equity markets sold off sharply amid concerns over heightened geopolitical tensions following President Trump’s threats to impose new tariff rates on countries opposing the proposed acquisition of Greenland by the United States. The situation has provided fertile ground for extensive media commentary, with coverage focused on the legal, political, and ethical implications of one nation pressuring another to relinquish its sovereignty.

Predictably, President Trump will not back down and most likely escalate the tensions. Tomorrow, President Trump will be speaking at the World Economic Forum in Davos, Switzerland, and has a one-on-one interview with CNBC’s Joe Kernen. Lots of opportunities to throw fuel on the fire. Expect more stock market volatility.

What Does This Mean to Me?

Since October 28, 2025, the major indices have been trading in a flat range. Typically, this is an indication of investors rebalancing, profit-taking, or consolidating portfolios after two consecutive years of double-digit gains. Note the outperformance YTD of the mid and small cap indices. We will be monitoring these sectors to determine if their outperformance continues.

If corporate fundamentals remain favorable, this period offers good opportunities for new investments in anticipation of resuming a positive uptrend. A better scenario is a short-lived panic selloff prompted by concerns possibly due to Truth Social posts by President Trump or from his administration.

Today, the S&P 500 and NASDAQ sold off, pushing both indices into negative territory for the year at -0.71% and -1.24%, respectively. In contrast, gold and silver mining stocks continued their rally. Below are the daily and year-to-date gains for several key mining holdings within Up Capital portfolios:

A terrific buying opportunity could develop should investors overreact negatively to some outlandish rhetoric from the Administration. The list of topics to spook investors is growing, which includes changing tariff policies, the hostile takeover of Greenland, turning Gaza into a resort, confiscating Venezuela's oil, or building an entirely new White House.

Our view is that the US economy and stock market remain favorable, and investors should remain patient through market volatility.