There’s no dressing it up: holding gold stocks has been a pretty miserable experience for me in 2026. I own shares in the L&G Gold Mining ETF (LSE:AUCP), which has slumped 11% in value over six months.
The exchange-traded fund (ETF) — which gives me exposure to 45 different mining stocks — has dropped more sharply than the 4% fall in gold prices themselves.
Yet I don’t regret investing in that gold fund for a second. The reason? I’ve made an 83% return on my investment since opening a position in April 2025.
Going for gold
The question is, can gold shares continue outperforming? I think so. Geopolitical instability’s on the rise, while inflationary pressures are growing across the globe. Combined with strong central bank buying and a weak outlook for the US dollar, conditions are there for gold to continue its multi-year bull run.
UBS analysts, for instance, think gold will surge to $5,500 an ounce by year’s end. That’s up from around $4,150 today. And here’s the thing: I think mining companies could remain a better way to target smashing returns than investing in gold itself…
Could gold stocks fly?
As mentioned, my gold stocks ETF has dropped more sharply than the metal price in 2026. This reflects the ‘leverage’ effect, where changes in the gold price produce even larger moves in mining shares.
When gold prices fall, earnings can sink much faster than the metal. The reason? Most mining costs don’t fall in line with the gold price, meaning profits drop more sharply than revenues. But this phenomenon also works in reverse when gold prices rise. Those fixed costs mean every extra dollar in sales drops straight into the profits column.
And I have the proof. Over five years, yellow metal prices are up 134%. The L&G Gold Mining ETF in the same period has soared an even-better 204%. Given the bright outlook for gold prices, I think further enormous gains are possible.
A 527% total return!
So which are the best gold stocks to buy today? As you may expect, I think that Legal & General fund’s a brilliant vehicle to consider, which allows me to effectively balance risk and reward.
But for investors seeking particular gold stocks to buy, I think Pan African Resources (LSE:PAF) is a great one to consider. Over five years, it’s delivered a blistering total return of 527%.
This FTSE 250 miner’s surged partly due to the gold price boom. Yet that’s not the whole story, as a big production boost have also bolstered profits. Volumes hit 196,527 ounces in 2025, up roughly 6% year on year, and are predicted at 275,000-292,000 ounces in 2026. They could even top 300,000 ounces in 2027, the company has advised.
Pan African’s seen some production issues more recently though, hitting its share price. Such problems could spring up again at any time, as with any gold stock. But speaking from a long-term perspective, I remain highly confident. It has 13m ounces of gold reserves and total resources of 42m across its portfolio to drive future growth.
Should you invest £5,000 in Pan African Resources Plc right now?
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Royston Wild owns shares in Legal & General and L&G Gold Mining ETF
