The scarce assets investors are turning to as soaring bond yields revive inflation fears

Mining stocks, property and gold are emerging as investors’ best defence against a fresh surge in governments’ borrowing costs, as investors hunt for assets that can hold their value if inflation proves hard to tame.

While banks and retailers are bearing the brunt of Labor’s unpopular Budget, which has hit house prices and will raise taxes on share market investors.

“One of the major themes in the market right now is scarcity,” said Kyle Rodda a Market Strategist at Capital.com. “Any business along the supply chain of products in high demand to supply the artificial intelligence infrastructure buildout are doing well.

“We saw that with BHP’s [profit] result this week. It’s benefiting from limited demand for resources like copper. Whereas companies with exposure just to the Australian consumer or household spending aren’t really telling the market a story of ongoing profit growth.”

Rodda said investors are left with little choice on the share market given the number of consumer-facing companies hurt by high interest rates now sitting at their highest level since 2011.

“The banks have been popular, but their share prices will now be weighed down by what’s happening in the property market,” he said.

Across August, the major banks have all warned home loan applications have tumbled since the Labor’s May 2026 Budget.

“Their valuations also reflect a profit growth story that is not realistically there over the next couple of years,” said Rodda. “And I don’t think the falls in residential real estate valuations are really priced into bank shares right now either.”

Retailers feel squeeze

The pressure is even more obvious among retailers, where higher living costs and falling household wealth are forcing consumers to pull back.

On Monday, shares in retail bellwether JB Hi-Fi posted their worst performance in 15 years, with a 12.3 per cent plunge, after reporting weaker sales through July and August.

Management blamed the decline in same-store sales on shoppers tightening their belts as economic conditions deteriorated.

The reaction from investors matters because share prices tend to anticipate changes in the real economy. The sell-off suggests the market is still bracing for further weakness in consumer spending rather than pricing a rapid recovery.

Results from Bendigo Bank, Harvey Norman, Domino’s Pizza and discount jeweller Lovisa next week should provide further clues about the health of the domestic economy.

Citi Australia has already downgraded JB Hi-Fi from buy to neutral following its disappointing result and warning about consumer spending.

But the property story is more complicated.

Citi said positive results from residential property giants Mirvac and Stockland suggest investors are too negative on a sector that is traditionally a potent wealth creator.

Gold jumps on Thursday

Gold is offering investors a much simpler hedge against the uncertainty.

The precious metal jumped 3.5 per cent to $US4486 an ounce early on Thursday, taking its gain over the past month to 9 per cent and its one-year advance to 31 per cent.

The rally accelerated even as bond yields climbed, highlighting the appeal of an asset that cannot be diluted by governments issuing more debt or money supply.

Wall Street’s major indices also rose after the US Treasury announced it would ramp up its own buyback of US government debt in a move that should artificially lower the rising bond yields.

On the ASX, gold miners are revealing wealth windfalls for investors as a result of the metal’s historic run.

Gold and copper producer Evolution Mining reported a 63 per cent surge in net profit to a record $1.56 billion for the year to June 30. Its final dividend jumped 62 per cent to 21¢ a share.

Shares in the nation’s third-largest gold miner by market cap have rocketed 71.4 per cent over the past year to propel its value to $28 billion.

Broker Canaccord Genuity has raised its valuation of Evolution to $12.65 a share, pointing to its growing exposure to copper as well as gold.

The strategy mirrors the broader shift among mining giants such as BHP towards commodities expected to benefit from the energy transition and the massive infrastructure investment required to build the AI economy.

In July, Evolution acquired West Australia’s Greater Duchess copper project via the $213 million acquisition of Carnaby Resources.

The scale of the gold rush windfall is also evident at Newmont, the world’s largest gold miner. It received an average realised gold price of $US4661 an ounce in the first six months of 2026, compared with $US3498 for the whole of 2025.

Rodda says the rush into hard asses may accelerate as investors stare down higher borrowing costs, weak consumers and a potentially prolonged inflation shock.