Gold has closed 2025 near $4,500 per ounce — a new all-time high and a gain of over 70% for the year, marking one of the strongest annual performances since the 1970s inflationary era. Central bank purchases hit record levels (over 1,000 tonnes in many estimates), real yields turned deeply negative, and safe-haven demand from both Eastern and Western investors provided relentless support.
For experienced investors who've followed the sector through multiple cycles, this kind of move raises an obvious question: With gold at a gold price all time high, are gold stocks overvalued?
The short answer, based on current gold mining stock valuations, is no — not yet. In fact, the disconnect between record metal prices and still-reasonable equity multiples creates one of the more compelling setups I've seen for investing in gold stocks at high gold prices.
Let's examine the data, the drivers, and what this means for a gold stock investment strategy heading into 2026.
Why Gold Hit All-Time Highs in 2025 — And Why It Matters for Stocks
Gold's surge wasn't driven by a single factor but by a confluence of structural forces that emerged stronger through the year.
Central banks were the backbone. The World Gold Council reported over 1,000 tonnes of official sector buying in 2025 — the highest on record — led by China, Poland, Turkey, and India as part of broader reserve diversification away from the U.S. dollar.
Real yields plunged into negative territory as inflation persisted above targets while central banks (particularly the Fed) cut rates aggressively. Historically, negative real yields have been one of the strongest correlates with sustained gold rallies.
Geopolitical uncertainty — trade tensions, regional conflicts, and election volatility — drove safe-haven flows. ETF inflows returned after years of outflows, adding hundreds of tonnes of demand.
Supply remained constrained. Mine production stayed essentially flat year-over-year, while discovery rates continued their long-term decline.
The result: Gold spent much of 2025 in a steady uptrend, repeatedly setting new records without the manic speculation of past peaks.
The Surprising Part: Mining Stocks Haven't Fully Caught Up
At $4,500 gold, low-cost producers are generating margins of $2,500–$3,000 per ounce — levels not seen since the early 2010s peak.
Yet the sector's average price-to-net-asset-value (P/NAV) multiple remains around 0.7–0.9× for many quality names — well below the 1.2–1.5× seen in previous bull markets.
The VanEck Gold Miners ETF (GDX) — a proxy for seniors — gained roughly 75–85% in 2025, respectable. Juniors (GDXJ) performed better late in the year but still trade at historically compressed valuations.
This gap between record margins and restrained multiples is the core reason gold stocks are not expensive at $4,500 gold.
Historical Context: Stocks Often Lag Then Catch Up
This pattern isn't new.
In the 2001–2011 bull market, gold stocks spent years undervalued relative to rising metal prices before a sharp re-rating phase in 2009–2011.
In 2016, miners initially lagged gold's post-Brexit move before exploding higher.
When margins expand dramatically but multiples remain low, it creates embedded leverage. The market eventually recognizes the cash flow — often suddenly.
Current Valuation Metrics (Late December 2025)
Senior Producers: Many trade at 0.8–1.0× NAV despite record free cash flow generation.
Developers: Quality projects with feasibility studies often at 0.4–0.6× NPV.
EV/oz Metrics: Low relative to historical bull market levels.
Analysts from J.P. Morgan, Goldman Sachs, and Bank of America — all forecasting $4,800–$5,000+ gold in 2026 — note this valuation disconnect as a key reason for continued upside in equities.
Should You Buy Gold Stocks at Record Gold Prices?
The fear of buying at all-time highs is understandable — but misleading in this context.
Gold at $4,500 reflects real structural demand. Mining stocks at current levels reflect skepticism about sustainability.
When that skepticism breaks — as fundamentals (margins, cash flows) become undeniable — re-rating follows.
This isn't speculation. It's positioning for higher gold prices in an environment where operating leverage hasn't been fully priced.
Positioning for Higher Gold Prices: A Practical Approach
For experienced investors:
Focus on quality: Low AISC (<$1,300/oz), strong balance sheets, proven teams
Favor margin expansion plays: Producers and near-producers over pure explorers
Maintain discipline: Size positions appropriately, hold cash for volatility
View corrections as opportunities, not threats
The Bottom Line
Gold at $4,500 does not mean gold stocks are expensive. It means many remain undervalued relative to current fundamentals — with substantial embedded leverage if prices hold or rise further.
The 2025 rally validated the structural bull case. 2026 could validate the equity re-rating case.
This is a unique moment where record metal prices coexist with reasonable mining valuations — a setup that historically hasn't lasted long.
Stay patient and selective,
CanadianMiningReport.com
P.S. These observations are based on public market data and analyst commentary as of late 2025. Markets change quickly. In The Wealthy Miner community, we track evolving valuations and positioning weekly. Join if you'd like ongoing discussion.
Author
Ben McGregor authors the Weekly Roundup at CanadianMiningReport.com, providing sharp analysis of the metals and mining sector. With a talent for spotting trends, Ben distills complex market shifts into clear, engaging insights on TSXV junior miners. His weekly updates cover gold, copper, uranium, and more, blending data-driven perspectives with a knack for identifying opportunities. A vital resource for investors, Ben’s work navigates the dynamic junior mining landscape with precision.