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Gold has had a specular run this year, rising more than 40%. Experts believe it can go higher though – according to Goldman Sachs it could hit $5,000 per ounce in 2026 if US Federal Reserve independence is comprised.
Now, there’s no guarantee that the precious metal will go to $5,000 next year, of course. However, if it does, I’d expect UK gold stocks to soar.
Leveraged plays on gold
When gold prices are rising, gold mining stocks often provide bigger gains than the commodity itself. This is because they benefit from operational leverage.
Typically, gold miners have relatively fixed operational costs. So when gold prices are rising and their revenues are higher, they tend to see a sharp increase in profitability.
For example, let’s say it costs a gold producer $2,000 to produce an ounce of gold. When the price of gold is $3,800 per ounce (near where it is today), the company’s profit is going to be $1,800 per ounce.
If the gold price were to rise to $5,000 however, the company’s profit per ounce rises to $3,000. So a 32% increase in the price of the commodity has resulted in a 67% increase in profitability for the producer.
Two UK gold stocks to watch
Zooming in to UK gold stocks that could potentially benefit from higher gold prices, one worth highlighting is Pan African Resources (LSE: PAF). It’s a mid-tier miner that’s focused on mining gold in Africa.
This company is already producing gold, so it’s likely to benefit from higher prices. For the year ended 30 June, it produced 196,527 ounces, an increase of 5.6% year on year.
Meanwhile, it has very low costs – for its most recent financial year its ‘all-in sustaining costs’ (AISC) were just $1,600. So if gold was to rise to $5,000, this company would most likely clean up.
Given this set-up, and the fact that dividends are rising rapidly, I think this stock could be worth considering for those looking for gold stocks to buy. Especially now that the company’s looking to move from the AIM to the UK’s main market – this could make the stock appealing to a wide range of investors.
Another stock worth mentioning is Caledonia Mining. It’s a smaller miner that’s focused on gold production and exploration in Zimbabwe.
In the first half of 2025, it produced around 40,000 ounces of gold, generating revenue of around $121m. AISC for the period was $1,801. So like Pan African Resources, it’s making a ton of money right now and well placed to benefit from rising gold prices.
Understanding the risks
Now, it’s worth noting that with these kinds of gold mining companies, there are a lot of things that can go wrong. For example, companies can experience setbacks as a result of mine problems, staff strikes, weather conditions, and more. So there’s no guarantee they will perform well as investments, even if the gold price rises significantly.
For those keen to invest in gold stocks however, I think these names are worth a look.
