FTSE 100 reference points, AltynGold and further reading

Nominal versus real returns and potential expansion at a key gold asset

By Patrick 04 Feb 2026 3 min read

The Pillars of Society by George Grosz (1926)

On the face of it, the FTSE 100 has performed strongly in 2025, increasing by around 21% from January to December. According to the BBC, the UK's state broadcaster, the big rise in the index is good for investors.

The UK chancellor Rachel Reeves went further, and has claimed that the historic high for Britain’s stock market achieved on 2 January 2026 marked a “vote of confidence” in the economy after the index surpassed 10,000 points for the first time.

However this performance assumes the reference point, or the denominator, being Sterling pounds is reliable. The problem is that Sterling is an eroding currency and has not been a stable denominator for quite some time. For that reason, some skepticism is needed when listening to the UK's political and leadership class.

Sterling Debasement: A Denominator-Based View

Most investment returns in the UK are understandably reported in pounds. While useful, it is also misleading.

If the unit of account itself is weakening, nominal gains can disguise real losses. To correct for this, we must change the denominator.

Given gold is hard money, and not easily reproducible, nor can it be created by decree, means we should use this as the reference or root asset. We can therefore work out the real gain or loss in purchasing power as follows;

Step 1: Define the reference (gold in GBP)

Gold prices (GBP):

2 January: £2,119
31 December 2025: £3,206

Gold's return in sterling terms is:

R_gold(GBP) = (3,206 / 2,119) − 1
            = 1.513 − 1
            = 0.513
            = 51.3%

This represents sterling debasement relative to gold over the period.

Step 2: Nominal equity return (FTSE 100)

Over the same period:

R_FTSE = 21%

This is the return most investors would describe as a good year.

Step 3: The denominator (real return) formula

To measure real wealth change relative to gold, we re-denominate the equity return:

R_real = ((1 + R_asset) / (1 + R_gold)) − 1

Where:

R_asset = FTSE 100 return (GBP)
R_gold = gold return (GBP)

Step 4: Apply the formula

R_real = (1.21 / 1.513) − 1
       = 0.799 − 1
       = −0.201
       = −20.1%

Interpretation

Despite a 21% nominal gain in the FTSE 100:

An investor lost approximately 20% of purchasing power relative to gold
Sterling weakened materially over the period
The equity return softened the loss

In gold terms, £1 invested in the FTSE 100 became approximately £0.80 of real monetary value.

AltynGold, Quiet Execution

AltynGold announced strong Q4 2025 results recently and provided an encouraging update to shareholders. Management have also showed that the key to value generation is quiet execution and stability.

Operationally and financially, 2025 was a strong year with 53k ozs of gold produced. Revenues hit a company record of $175m buoyed by both higher production and higher gold prices.

At ~54koz of production (notably ahead of guidance) and a realised gold price of ~$3,500/oz, AltynGold generated $175m of revenue. H1 2025 operating margin was north of 50%, so taking this forward we can assume EBITDA margins are comfortably above 50% in real time. This implies a current EBITDA run rate of $85–95m, if not more with a ~$5,000 gold price.

This results in a real time EBITDA multiple of 7 [Enterprise Value of £434m / £58m annualised EBITDA]. The share has garnered little interest despite demonstrated execution, self-funded growth, and expansion options. Aside from clever retail investors, there doesn't appear to be any mainstream or institutional interest in the stock.

The majority of mid-tier miners (100k/200k ounce producers in North America) are priced and command higher multiples (10x to 20x). Naturally, it seems like management are intent on addressing this next, with the announcement signalling efforts to increase scale.

In particular, management are contemplating throughput expansion from 1Mtpa to 2–2.5Mtpa. If the expansion proves both achievable and economic, it would represent a step change in output and cash generation for AltynGold's Sekisovskoye asset.

This will require further capital investment in processing capacity, power and tailings infrastructure (i.e. no dividends on the horizon just yet). Management has been explicit that this capex step is subject to a detailed technical and financial review, with a Board decision expected in 2026. One suspects this is being somewhat slow pedalled so as to get 'confirmation' that the increases in the price of gold seen are 'real', before any project is committed to.

In any event, if the price of gold stays anywhere near current levels, FY2026 cash flow would exceed FY2025 even without volume growth. Counter intuitively, any delay to expansion would actually be a positive in the long run, as this gold in reserve can be mined at what should be much higher metal prices in future.

Regarding Teren-Sai, and given AltynGold’s close working relationship with the Kazakh authorities, a successful licensing outcome would be consistent with precedent. Granted, there are no guarantees around the time frame provided by management. None of this optionality is included in the valuation so any progress here is upside potential.