Image source: Getty Images
Fresnillo (LSE: FRES) looks like the ultimate growth stock right now. Shares in the FTSE 100-listed gold and silver miner have jumped from 508p to 3,079p in just two years, a gain of 506%.
That’s an astonishing run, and there’s a simple reason for much of it. Gold and silver prices have surged, making Fresnillo’s mines far more profitable. Gold has been boosted by inflation fears, geopolitical turmoil, central bank buying and concerns about ballooning government debt. Investors have also been looking for somewhere to hide from uncertainty, and the threats to fiat currencies.
Fresnillo has been one of the biggest beneficiaries. Its shares soared about 400% in 2025 alone, making it the FTSE 100’s best performer.
There isn’t an automatic 100% link between gold and Fresnillo shares. Mining is a risky business. Production can disappoint, costs can rise and mines can suffer operational problems.
Even so, the two tend to move fairly closely. In fact, anyone who bought Fresnillo two years ago would have done far better than someone who simply bought gold.
Rising metal prices can multiply miner’s profits. Once the costs of running a mine are covered, much of any increase in the selling price flows through to the bottom line. That gives successful miners an edge over commodity prices. In the good times, that is. These things can always work the other way.
The valuation puzzle
This year has been much choppier for precious metals. Gold rocketed above $5,500 at the start of 2026, a record high, before plunging towards $4,000. Fresnillo shares are down around 8% year-to-date.
The company’s numbers remain impressive though. Full-year results, published on 3 March, showed adjusted revenue up 27.6% to $4.6bn and EBITDA earnings up 80.7% to $2.8bn.
Half-year results (4 August), were even stronger, with revenue up 74.7% to $3.4bn. That’s not just down to the gold price, production is rising too.
The golden question
Gold has recovered a little and is trading around $4,400. Right now, much depends on the bond market. Yields have been rising everywhere lately, as the Iran war threatens to drive the oil price and inflation even higher. That’s bad news for precious metal investors, because they don’t pay any income. It increases the opportunity cost of holding non-yielding assets.
That makes Fresnillo tricky. It trades on a price-to-earnings ratio of about 22, which looks surprisingly reasonable after such a spectacular run. I think investors might consider buying, but I’m not sure I’d jump in right now. I’m concerned about inflation and the possibility that bond yields may have a fair bit further to rise.
If gold falls further and Fresnillo’s P/E shrinks, I could be tempted to fill my boots. I have no direct gold exposure in my portfolio. I’ll be watching this one like a hawk, waiting for the right opportunity. In the meantime, a more immediate FTSE 100 growth opportunity has caught my attention….
What growth stock do we like better than Fresnillo Plc right now?
One of our Share Advisor analysts has just released a brand new stock report that we think is a must-read for any investor looking to try and generate potential growth.
And the best bit is that you can see if for yourself, right now, absolutely free of charge!
No jargon. No hard sell. Just a clear look at a growth share idea we think is worth your time.
Harvey Jones does not hold any positions in the companies mentioned.
This story originally appeared on Motley Fool
