International capital markets are currently under significant pressure. Rising oil and energy prices, along with growing inflation concerns amid geopolitical tensions—particularly those related to the U.S.-Iran conflict—are causing considerable uncertainty. As a result, nearly all major global stock indices have posted significant declines.
The NYSE Arca Gold BUGS Index (HUI) was not spared from this trend. The US dollar-denominated index, which primarily tracks major international gold producers and gold mining companies, fell from its all-time high of 986.06 points on March 2, 2026, to 707.92 points by March 19, 2026—a decline of approximately 28%.
The precious and base metal funds of Commodity Capital AG were also unable to escape this downward trend. The Commodity Capital Global Mining Fund (A0YDDD) recorded a decline of -28% over the same period, while the Structured Solutions Next Generation Fund (HAFX4V) performed comparatively stably with a loss of -17%.
Both funds focus primarily on junior mining companies with mining operations in politically stable regions such as North America and Australia. In addition, selective investments are made in the Andean region, particularly in Peru and Chile. Regions such as Africa or the Far East are deliberately avoided.
Against this backdrop, it is worth taking a nuanced look at the fundamental situation in the mining sector.
Energy Supply in the Mining Industry
Energy-intensive ore extraction and on-site processing (particularly crushing and grinding processes) are now almost entirely powered by electricity. In Canada, for example, approximately 57% of electricity generation comes from hydropower and about 8% from wind energy. Fossil fuels such as gas and coal account for around 32%, while oil’s share is only about 2%.
In the U.S. and Australia, the share of fossil fuels is higher (around two-thirds), but here too, oil’s share remains marginal, also standing at about 2%.
Since crude oil is traded on the world market and a large portion of the volumes transported through the Strait of Hormuz is delivered to Asia—particularly to China—the direct impact on energy supplies in the primary production regions is limited. Furthermore, the U.S. and Canada are net exporters of crude oil. Only Australia is more heavily reliant on imports of refined products.
Impact of Rising Energy Prices on the Cost Structure
Modern, efficiently operated mines currently produce one ounce of gold at so-called All-in Sustaining Costs (AISC) of approximately $1,600. A 10% increase in the oil price affects total costs by only about 2%, corresponding to an increase to approximately $1,632 per ounce. Even with a 30% rise in oil prices, costs would rise to only about $1,700 per ounce.
With the current gold price at around $4,700 per ounce, this still results in a very comfortable net margin of about $3,000 per ounce.
Context
Rising energy prices undoubtedly have an impact on the cost structure of mining companies. However, this effect remains moderate relative to the overall margin. The impact on profitability is therefore limited.
Furthermore, Commodity Capital AG’s preferred investment targets—particularly junior mining companies in North America and Australia—are only marginally affected by geopolitical tensions and energy price fluctuations.
Structural Demand as a Key Driver
Commodities such as gold, silver, copper, lithium, and rare earth elements are indispensable both as stores of value and for industrial applications. At the same time, supply is limited. In many segments, global demand cannot be met by current mine production alone. Recycling and the depletion of existing inventories remain essential.
Additional demand drivers stem from long-term trends such as the expansion of artificial intelligence, the global energy transition, the electrification of transportation, rising defense spending, and potential reconstruction programs in conflict regions. Despite short-term market fluctuations and rising energy prices, the fundamentals of the mining sector therefore remain exceptionally robust. Margins remain high, companies are solidly positioned, and demand remains intact.
Conclusion
The fundamentals of the mining sector are exceptionally robust, margins remain high, companies are in a solid position, and structural demand remains intact.
At the same time, mining stocks are currently being punished across the board along with the broader equity market as part of general market corrections—regardless of their fundamental strength.
For long-term investors focused on fundamental valuation, this could present attractive opportunities. Existing positions appear to remain justified, and selective additional purchases could be prudent—depending on one’s risk profile.
Minerals remain a central pillar of the global economy, as they provide the foundation for virtually all industrial and technological developments.