Despite Pullback in Gold Mining Stocks, Valuations Are Still Too Rich

The price of gold has been surging in 2025, recently reaching about $4,380 per ounce—another historical high. It’s up almost 70% this year. However, prices have pulled back and are now down 6%, to about $4,100 at the time of writing. Silver and platinum prices are also materially lower.

Why it matters: Lower spot gold sees our gold mining coverage shares down by 9%-11%. Due to operating leverage, miner share prices tend to move around more on the upside and downside than changes in commodity prices.

The bottom line: Our gold miner fair value estimates are unchanged, with shares still overvalued between 20% and almost 200%. Spot gold is still more than double our assumed midcycle or long-term price of about $2,000, based on our estimate of the marginal cost of production.

• We can’t predict changes in near-term gold prices, nor when they will occur. However, given the extremely bullish sentiment driving prices, odds are well in investors’ favor that it will come down further over the long term, and there will likely be better opportunities to buy gold miners.
• On the other hand, sentiment drives near-term gold prices. As such, euphoria could well carry on for a while yet, sending gold prices back higher in the short term.

Big picture: Neither clients nor the media were very interested when we recommenced coverage of Newmont, Barrick, Agnico Eagle, and Kinross in April 2023, when gold was around $2,000. Now investor interest has reached a fever pitch, showing the cyclicality in sentiment.

• Other contra indicators include people lining up to buy gold and exchange-traded funds receiving large inflows. Fear of missing out can be a powerful force, particularly manifesting in demand for ETFs, which tend to be the marginal buyers of gold and often key drivers of near-term prices.