What Victor Smorgon Group thinks of the outlook for gold after 54 per cent return in its gold fund

The Victor Smorgon Group’s gold fund returned 54.2 per cent last financial year. Here’s what executive chairman Peter Edwards sees as the best investment opportunity this year.

Victor Smorgon Group executive chair Peter Edwards, right, with co-CIO Joseph Sitch.

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The billionaire Smorgon family is bullish on gold and crypto, and optimistic on AI’s prospects, but it is in real estate in Australia and the US where much of the group’s wealth is still tied up.

All up, 40 per cent of the Victor Smorgon Group’s money is in property in these two countries, with the family office pushing harder into the US in recent years as Australian developments became less attractive.

A further 20 per cent of the firm’s wealth is in gold, a bet that has more than paid off in the past year. The firm’s gold fund, which is open to external investors, returned 54.2 per cent after fees in the 2025 financial year, outperforming both local and global gold indices.

Since its inception in May 2020, the Victor Smorgon Partners Resources Gold Fund’s net return is 115 per cent, outperforming the ASX Gold Equities Index by 63.5 per cent.

The family’s long-term bet on gold hasn’t always been an easy ride. A short-term Covid bump in the gold price was long gone by the end of 2020 and gold was out of favour for the next couple of years before investors jumped back in from 2023.

“My grandfather used to say, everything’s a 10-year overnight success. You’re there and you’re there and you’re there and you’re worried about it, and it’s not working for you, and all of a sudden it works for you,” executive chairman Peter Edwards said in conversation with The Australian at the family’s South Yarra office.

“You’ve just got to be around when you believe your thesis will play out, but you really just don’t know when it’s going to be and in essence, I guess it’s about how long you can wait for it.”

For a long time, fund managers and asset allocators were quick to dismiss the idea of gold as a worthy asset to hold in a portfolio. That has changed as global tensions have helped push the gold price to record highs.

“I’ve been in conferences with people, high-powered asset allocators within these large funds, and two years ago, you’d talk to them about gold and they’d snigger,” Mr Edwards said.

Those same fund managers are surely not laughing now. Indeed, high-profile stockpickers such as Hamish Douglass, who shunned gold throughout his career, now says gold is at least “worth a conversation”.

Geopolitical tensions are part of the reason Mr Edwards, the grandson of Melbourne industrialist Victor Smorgon, is still bullish on the outlook for gold.

If the world is bifurcating, investors need a hard reserve, he says. With the US dollar having lost its sheen, investors are increasingly allocating to gold.

Victor Smorgon, pictured in 2007. ‘My grandfather used to say, everything’s a 10-year overnight success,’ Peter Edwards says.

The Smorgon family, estimated to be worth well north of $2.7bn, is not necessarily looking for gains in the gold price for its returns following the yellow metal surging past $US3300 this year. Instead, the Smorgons are digging around for the best gold miners.

The disparity between the gold price and where cashed-up gold miners are trading right now is one of the better opportunities in the market right now, Mr Edwards said.

In Australia, the firm has a bit of a love/hate relationship with gold miners, Victor Smorgon co-CIO Joseph Sitch said.

The family office likes companies like Ramelius Resources, which have been able to deliver free cash flow and grow it over time.

“They’ve been very good capital allocators over a long period of time. So that’s really important to us,” Mr Sitch said.

The family office is seeing amplified opportunities in the US due to gold making up a smaller percentage of the global or US indices.

“Companies like Newmont are at historic lows. They’re currently achieving a gold price $US400 or $US500 higher than the current market is modelling, and with every incremental dollar of earnings they’re committing to make a buybacks.”

After repositioning its property portfolio away from Australia and towards the US, the family is positive on the outlook for US real estate. The Smorgons owns a number of multi-family (apartment) buildings in the US that they rent out.

“We were quite large in Australia, but since 2018 we’ve been to re-establish that program in the US. The financing requirements are a lot less over there. You have 30-year low-rate loans to facilitate multi-family and residential rentals and the like. None of that is in Australia,” Mr Edwards said.

The Smorgon’s South Yarra office itself is a gold mine of art collected over many years. The paintings adorning the walls of the multi-floor office sit alongside key items from the family’s own rich history.

Victor Smorgon immigrated to Australia with his family in 1927 and, after arriving from Ukraine, his father and uncles ran a kosher butcher shop. When old enough, Victor joined the family business. From there, he expanded into plastics, glass, steel and recycling and, along with the rest of the family, established Smorgon Consolidated Industries.

With five generations of wealth to manage, Mr Edwards, like the rest of us, is increasingly turning his attention to AI and robotics.

While some investors have warned of the disastrous societal consequences of AI, Mr Edwards is more optimistic. But the advancement of robotics and the prospect of a $10-an-hour workforce may raise some broader challenges, he cautioned.

“There’s a broader question around humanoid robots post-electrification of autonomous cars and a real question of what it actually means for society as a whole.

“There’s lots of data out that says, on average, the employment of robots will be $10 an hour when you take in operating costs, maintenance costs, purchase costs. What does the world look like if everyone’s got robots that are doing stuff at $10 an hour?”

Mr Edwards suggested a robot workforce could become a government service, raising questions about the investment potential.

“Government has to control the labour force of the country. So does it become, a bit like oil in the US, actually a government-mandated thing and not an investment opportunity at all because it’s a race to the bottom on cost?”

Originally published as What Victor Smorgon Group thinks of the outlook for gold after 54 per cent return in its gold fund