Gold mining stocks have soared 155% over the past year. Have they peaked? A range of market indicators suggests the answer is a resounding “no.” The sector, as tracked by the VanEck Gold Miners ETF (GDX), remains historically undervalued with significant room for further upside, according to analysts.
The core thesis hinges on a growing “valuation gap” between the price of physical gold and the equities of the companies that mine it. Kip Herriage, founder of Vertical Research Advisory, describes the current situation as a “historic disconnect.” Mining stocks are still valued as if gold were trading between $2,000 and $2,500 per ounce, while spot gold sits firmly above $5,000.
“Gold miners are trading at a discount we’ve never seen before,” Herriage emphasized. “Despite the strength in gold and the substantial rally in the sector, valuations remain near historic lows.”
For Herriage, this rally is far from over. In a recent social media post, he argued the move in mining stocks may have only “just begun.” A striking comparison illustrates his point: the total market capitalization of all global gold miners is approximately $1 trillion, which is less than the $1.1 trillion market cap of Walmart Inc. (WMT).
“This is not normal,” he stated. “Decades ago, gold miners represented over 10% of global equity market value. Today, that share has shrunk to about 1%.” This under-allocation is mirrored in investment portfolios, where gold-related assets have stubbornly remained at just 1-2% of global assets, a stark divergence from the metal’s price performance.
Valuation metrics strongly support the “cheap” narrative. Senior gold miners currently trade at 0.75 times their net asset value (NAV), while junior miners trade at a mere 0.51x NAV—levels significantly below historical averages.
Despite a highly supportive macro backdrop—including relentless central bank gold purchases, geopolitical tensions, and wavering confidence in fiat currencies—the gold mining sector remains off most investors’ radar. This is a sector that has historically offered 2-3x leverage to moves in the underlying commodity.
“The real leverage is in the miners,” Herriage said. “Given the current environment of depressed capital expenditures and severe underinvestment, we expect this group could see a 10x move over the next 3 to 4 years. If gold reaches our target of $15,000/oz and silver $300/oz, the upside potential expands to 20x.”
Echoing this bullish outlook, Bank of America has named gold miners a top pick for 2026. Analyst Lawson Winder cited geopolitical risks, the trajectory of the U.S. dollar, and heightened global focus on securing critical mineral supplies as sustained tailwinds for the sector.
The bank’s commodity strategist, Michael Widmer, further bolstered the case by projecting that gold could break above $6,000/oz, which would provide a fundamental basis for further gains in mining equities. Notably, even after the past year’s powerful rally, the forward price-to-earnings ratio for gold miner ETFs stands at a median of 31.7, below its historical average.
Fund flows confirm the lack of widespread investor participation. Gold miner ETFs have suffered net outflows of roughly $2.2 billion over the past year, a contraction of 12.5%, indicating that both institutional and retail portfolios remain underweight the sector.
As gold prices trade at record highs, the companies that dig it out of the ground continue to be priced at a deep discount. This historic mispricing suggests the long-awaited valuation repair for gold miners may indeed be in its early innings.
