How Trump’s Chaos Is Fueling South Africa’s Gold Boom

While US President Donald Trump has taken an antagonistic stance towards South Africa, his unpredictable trade policies and global instability have driven up gold prices, benefiting South African mining companies.

Trump’s Attacks on South Africa

Trump’s controversial remarks on South Africa’s land expropriation laws and his claim of land grabs led to a freeze on US aid to the country. He also offered refugee status to white South African farmers, further escalating tensions.

This move is part of Trump’s broader foreign policy shake-up, which includes:

• Threats of land acquisitions in Greenland, Panama, and Gaza.
• A hardline approach to the Russia-Ukraine war, bypassing Ukraine and the EU.
• A global trade war, including higher tariffs on steel and aluminum imports.

Trump’s Policies Push Gold Prices to Record Highs

Despite economic turbulence, South African gold miners have benefited from Trump’s policy chaos, which has driven gold prices towards the $3,000/ounce mark.

The Bureau for Economic Research (BER) explains:

• High interest rates usually reduce gold’s appeal, but Trump’s tariff hikes and erratic policies are driving investors to safe-haven assets like gold.
• US inflation surged, forcing the Federal Reserve to adopt a more hawkish stance on interest rates.
• US stocks declined, while Treasury yields rose—South Africa’s 10-year bond yield also increased in response.

South African Mining Stocks Surge Despite Production Declines

As a result, the JSE ALSI ended the week on a positive note, with gold mining companies benefiting from the prolonged gold rally.

However, South Africa’s mining sector still faces challenges:

• December 2024 mining production fell 2.4% year-on-year, contrary to growth expectations.
• Gold production declined by 8.4%, while PGMs fell 7.1%.
• Mining output dropped 3.9% month-on-month, according to Stats SA.

Despite these setbacks, overall mining production grew by 0.4% in 2024, marking a modest recovery from 2023 (0.1% growth) and 2022 (-7.8% decline).

The Big Picture

While Trump’s policies have strained US-South Africa relations, they have indirectly benefited South African gold miners and investors.

As global uncertainty continues, gold remains a key asset, and South African mining companies could ride the wave of high prices, even as local production struggles.

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