CQS Natural Resources Growth and Income plc (LON:CYN) has announced its latest investor report for October 2025.
Commentary
After gold’s impressive year-to-date rally to a peak of $4,381/oz on the 20th of October, the metal experienced a healthy correction, stabilising to end the month around 3% higher. Gold displayed unusually low volatility during its earlier gains, and this pull-back likely helped temper speculative excess.
The retracement was driven by easing safe-haven demand amid tentative progress in US-China trade talks and a firmer US dollar. These factors outweighed the potential impact of the Fed’s early completion of its $2 trillion quantitative tightening phase; a move that would typically spur speculative activity to address signs of market stress.
Gold closed October at $4,003/oz, still an attractive level for mining equities, which generally assume lower metal prices in their valuations. Precious metal equities saw a sharp correction, with the Fund’s 20% NAV gain unwinding to finish the month flat, compared to a 3% decline in sterling terms for the GDXJ ETF. Despite this, underlying drivers for gold remain intact, and valuations continue to support the Fund’s high weighting in precious metals.
The World Gold Council (WGC) updated their demand data for Q3, with total demand by weight up 3% to 1,313t and by value up 44% to US$146bn. Investors are the current main driver behind this, with physically backed ETF buying accounting for 222t of demand, and bar and coin demand accounting for 316t. Central bank demand remains elevated but not the primary driver at 220t, tracking at a run-rate lower than the last 3 years which has averaged over 1000t pa. Jewellery markets were unsurprisingly softer in reaction to the high prices, but 13% higher in dollar terms, at US$41bn.
The trust continues to have a low oil weighting as OPEC’s focus on market share remains an overhang to oil prices and related equities in the near-term, with current excess production tracking around 2M bbls/d higher than global demand of around 100Mbbls/d. Despite longer-term supportive factors from declining sector capital investment together with disruption risks resulting from a reduced global spare capacity post OPEC’s quota unwinds and continued emerging market demand growth, equity valuations nevertheless remain relatively high. We continue to monitor this closely and look for better entry points over coming months to start to add back in to the sector, especially should sanctions succeed in reducing Russian output.
The trust reduced its position in Lynas Rare Earths following the strong rerating prompted by US investment into the sector. Valuations looked particularly stretched. This proved timely as subsequent US/China trade talks resulted in a 12 month extension to Chinese rare earth export ban being imposed which caused a considerable sell-off across the critical minerals sector.
Combined with trade optimism from some easing in US-China tensions, supply side mine disruption supported recent copper price momentum with the LME benchmark price gaining over 6% during the month, reaching a new high of over $11,180/t. While commodities have gained traction recently coppers trajectory continues to lag that of safe haven precious metals given the more muted backdrop for industrial commodities. As with E&P equities, copper mining equity valuations also appear comparatively less attractive than precious metal sector.
Despite a correction in precious metal equities the Company’s NAV return was 3%, helped by sterling slipping around 2% versus the US dollar during October. Trading focussed on some switching with positions in Westgold reduced throughout the month and proceeds from the sale reinvested into gold explorer Goliath Minerals a placing by Tolu Minerals.
