A powerful rally in gold and a surprising resurgence in lithium have provided a much-needed boost for Australian retail investors during a volatile year on the share market. Western Australian miners have been at the forefront of this charge, delivering extraordinary returns that have significantly outperformed the broader index.
Golden Glow Lifts WA Miners and State Royalties
According to Bloomberg data, gold is set for its strongest annual performance since 1979. This surge has propelled the share prices of numerous Perth-based gold producers to new heights, making them standout performers on the ASX.
A $500 investment in Eastern Goldfields miner Pantoro Gold at the start of January 2025 would have skyrocketed by 219% to be worth $1,595 by year's end, securing its place as the second-strongest performer in the ASX200. Similarly, a $500 punt on Africa-focused Resolute Mining would have grown to $1,550.
Other WA-connected gold companies like Regis Resources, Genesis Minerals, and Catalyst Metals also featured prominently among the year's top-performing stocks. The commodity's price strength has had a direct fiscal benefit, with the WA government's mid-year review forecasting an extra $800 million in royalty revenue from gold over the next four years, although it remains a smaller contributor than iron ore.
Lithium's Surprise Comeback and Defence Stock Dominance
Beyond gold, flickers of a price recovery and the ramp-up of WA's newest lithium mine, Kathleen Valley, fuelled a remarkable turnaround for Liontown Resources. Its shares gained 200% over the year, climbing from around 57 cents to $1.58.
The absolute star of the ASX200, however, was defence technology company DroneShield. An initial $500 investment in DroneShield shares in January would have quadrupled to $2,010 by the end of 2025. Data from CommSec showed it was the top-traded stock in early December, as optimistic buyers piled in.
Investors also actively took profits from WA-based lithium giant Pilbara Minerals (PLS) after its strong gains, making it the second most-traded stock on the platform during the period.
Market Finishes Higher Despite Turbulent Backdrop
The S&P/ASX200 closed at 8714.3 points on New Year's Eve, finishing 2025 up by 6.8%. This gain came despite a tumultuous year headlined by economic uncertainty and the impact of former US President Donald Trump's "Liberation Day" tariffs in April.
However, analysts struck a note of caution about the Australian market's relative strength. Capital.com analyst Kyle Rodda noted that the local bourse lacks the high-growth tech names driving other global markets, with heavy-weight sectors like financials and major miners only putting in "lukewarm" performances.
Looking ahead, markets are pricing in a one-in-three chance of a Reserve Bank interest rate hike in February, which Rodda suggested could weigh on stocks. BetaShares economist David Bassanese added that higher inflation and the shifting interest rate outlook had restrained the local market, even as corporate earnings showed improvement.
