By Paul R. La Monica

Gold and other precious metals are glittering -- and mining stocks are shining even brighter.

Yes, the yellow metal's record run to over $4,000 an ounce might be grabbing all the headlines. But gold mining stocks and funds have been even better performers this year.

The VanEck Gold Miners exchange-traded fund has climbed more than 130% in 2025, compared with a nearly 55% surge in the price of gold. Newmont, a recent Barron's stock pick, has jumped more than 135%. The miner's stock is trailing only the red hot crypto and stock brokerage firm Robinhood Markets; disk drive/data storage companies Seagate Technology and Western Digital; and artificial-intelligence leader Palantir in the S&P 500 this year. Still, the gold rush for the miners might not be done just yet.

Mining stocks are still relatively inexpensive despite their impressive run. The VanEck miner ETF, which includes Newmont, Agnico Eagle Mines, Gold Fields, Franco-Nevada, and Barrick Mining as top holdings, is trading for a little less than 15 times earnings estimates for 2026. That's roughly in line with its five-year average and well below its recent peak of 22 times forward earnings estimates from early 2023. The ETF is also trading at a multiple that is 34% below the S&P 500's price-to-earnings ratio, steeper than its typical 23% discount to the broader market.

Smaller so-called junior miner stocks still look attractive, too. The VanEck Junior Gold Miners ETF, which primarily owns small-cap mining stocks, is trading for just 13 times earnings estimates for next year, compared with a five-year high of 23 times. This ETF also trades at a larger-than-usual discount to the broader market of 40%.

As long as that valuation disconnect continues -- and gold prices continue to climb -- mining stocks should follow suit. Also helping is the fact that miners have only recently caught up with the rally in gold. Many mining stocks lagged behind the metal's performance over the past few years, partly due to operational issues and poor management.

Shares of Barrick, for example, have risen only about 25% in the past five years, while gold has more than doubled during that span. Barrick stock has caught up this year though, surging nearly 120% in 2025.

Miners' stocks may have even more room to climb. There are growing expectations that gold's record run isn't over yet, especially with rising hopes for more interest rate cuts from the Federal Reserve. Lower rates could put more pressure on the U.S. dollar, which has already slid nearly 10% versus other major currencies this year.

Gold tends to perform well when the greenback struggles and bond yields slide, because gold is perceived as a better and far less volatile store of value.

"Gold's meteoric rise and persistent bids seem completely rational in an environment of financial repression and currency debasement," said Paul Wong, market strategist at Sprott Asset Management, in a report Tuesday.

That sentiment should lift the miners too. Jan Szilagyi, co-founder and CEO of Reflexivity, an investment firm that uses AI to help pick stocks, noted in a report this week that Newmont "benefits from investors seeking safe-haven assets during political uncertainty, with a diversified portfolio of mines across multiple continents."

Higher gold prices should also help lead to bigger profits for the mining companies.

"Gold miners are experiencing more success because investing in gold-mining companies for professional investors seems more understandable than buying physical gold," said Alex Tsepaev, chief strategy officer of B2PRIME Group, a financial services firm that works with institutional and professional clients, in an email to Barron's.

"Another reason is that when the price of gold rises, miners often see profits rise faster than the price of the metal due to operational leverage -- higher gold prices mean their fixed costs account for a smaller share of revenue," Tsepaev added.

To that end, analysts expect Newmont's per-share earnings to soar more than 65% this year, according to FactSet. Profits should climb as long as gold prices rise further. Goldman Sachs recently forecast that gold could hit $4,900 an ounce, up more than 20% from current levels. And Wall Street has boosted their 2026 earnings-per-share forecasts for Newmont by nearly 40% since the end of June, putting the company's earnings growth for next year around 13%.

Of course, it's always scary for investors to ride a wave of exuberance. The fear is that you could be jumping on a trend too late. But gold mining stocks continue to have earnings momentum on their side. And they still look cheap -- unlike many of the tech stocks that have gotten a boost due to AI mania.

Write to Paul R. La Monica at paul.lamonica@barrons.com

This content was created by Barron's, which is operated by Dow Jones & Co. Barron's is published independently from Dow Jones Newswires and The Wall Street Journal.

(END) Dow Jones Newswires

October 08, 2025 13:41 ET (17:41 GMT)

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