As gold and silver continue their march to all-time highs, the market's focus is shifting quickly beyond spot to mining and smelting corporations.
Investing in mining and smelting corporations is more attractive than simply holding spot gold because of the operating leverage effect. Fixed costs such as labor and equipment operating costs for extracting and refining gold remain constant regardless of the gold price. Therefore, once the gold price passes the break-even point, any increase in price flows directly into the corporations' net profit. When gold rises 10%, the profits of mining corporations can surge 20%–30% or more.
According to Reuters, on the 26th (local time) spot gold briefly topped $5,100 per ounce, setting a new record high. Silver futures also broke $100, extending their record high rally.
Behind the rise in gold prices are safe-haven flows driven by heightened geopolitical tensions, indiscriminate tariff threats, and concerns about damage to the independence of the Federal Reserve. In addition, as emerging countries move to diversify foreign reserves into gold, Central Bank purchases are supporting the price. Goldman Sachs projected that Central Banks in emerging countries will buy an average of about 60 tons (t) of gold per month.
Silver prices are also soaring on twin pillars of industrial and investment demand. Industrial demand remains solid as silver is an essential material for the spread of solar panels and artificial intelligence (AI) data centers, while large inflows of investment capital from China and India, spurred by geopolitical anxiety, are pushing prices higher.
Amid the sharp price surge, money is flowing rapidly into related ETFs. According to Koscom ETF Check, so far this year there has been a net inflow of 443.5 billion won into ACE KRX Gold Spot, 326.8 billion won into KODEX Silver Futures (H), and 163.9 billion won into TIGER KRX Gold Spot. In just over a month, nearly 1 trillion won has poured into gold- and silver-related ETFs.
Beyond direct investment, interest is also heating up in mining and smelting corporations that can maximize profits by using operating leverage. Park Gwang-rae, an analyst at Shinhan Investment & Securities, said, "Mining and smelting corporations have large leverage, so in phases when gold and silver prices rise, their stock price gains are higher," adding, "In a risk asset-preferred environment, investments in related corporations are continuing."
Mining corporations have a structure in which profit leverage expands as gold and silver prices rise. Sales prices are immediately linked to gold and silver quotes, but fixed-cost-type expenses such as labor and electricity do not change much in the short term. As a result, price increases flow directly into operating profit without expense deductions, generating returns that outpace gains in the underlying asset. In fact, the net worth of NH-Amundi Asset Management's HANARO Global Gold Mining Corporations ETF surpassed 100 billion won as of the 22nd. That is 13 times the 7.7 billion won a year earlier, with a 1-year return of 188.81%.
Investor sentiment is also spreading to smelting corporations. Smelting corporations basically earn revenue by receiving concentrates from mines and charging smelting fees. But the real game-changer is the precious-metal byproducts such as gold and silver recovered during smelting. In particular, in the byproduct sales institutional sector, with labor and concentrate procurement expense fixed, the selling price per unit rises vertically as precious metal prices climb, maximizing profit leverage.
Korea Zinc shares, a representative example, rose from 1.28 million won at the start of the year to 1.83 million won on the 27th, up about 43%. Korea Zinc derives about 30% of sales from silver as of last year, and is seen as a direct beneficiary of the recent silver rally. Analyst Park said, "Korea Zinc's silver sales ratio will expand from 32.3% in 2025 to 47% in 2026, surpassing zinc."
Brokerages are also advising attention to LSMnM (formerly LS-Nikko Copper). LSMnM is a corporations whose main business is copper smelting and sells precious-metal byproducts such as gold and silver generated during the smelting process. Meritz Securities analyzed, "With the larger increases in gold and silver prices, LSMnM's revenue will rise 45.8% year over year to 4.5606 trillion won."
However, if gold and silver prices undergo a correction, the earnings volatility of mining and smelting corporations could increase, which is a risk. When prices fall, the burden of fixed costs such as labor and electricity can stand out, causing profit margins to drop sharply.