Gold has stumbled in 2026, leaving many investors wondering if the precious metals trade is over.
But some Wall Street strategists believe the real opportunity isn’t in buying gold itself. It’s in buying the companies that mine it.
After months of underperformance, gold mining stocks are trading at some of their cheapest valuations in years. If gold simply stops falling, analysts believe many of these stocks could significantly outperform both the metal itself and the broader stock market.
Gold Has Fallen. Gold Miners Have Fallen Even More.
Gold is traditionally one of Wall Street’s favorite safe-haven assets during periods of economic uncertainty.
With inflation still elevated, geopolitical tensions simmering, and investors increasingly questioning sky-high AI valuations, many expected gold to continue climbing after last year’s massive rally.
Instead, the opposite happened.
Gold has fallen more than 5% so far this year after surging roughly 65% in 2025. A stronger U.S. dollar has weighed on prices, cooling enthusiasm for the metal.
Gold mining stocks have been hit even harder.
The VanEck Gold Miners ETF (NYSEARCA: GDX) has declined roughly 11% this year, leaving many of the industry’s largest companies trading well below recent highs.
For contrarian investors, that may be creating an attractive entry point.
Why Miners Often Beat Gold
Owning gold miners isn’t the same as owning physical gold.
Mining companies have relatively fixed operating costs. When gold prices rise, much of that additional revenue flows directly to profits, allowing earnings to increase much faster than the price of gold itself.
That operating leverage is why mining stocks have historically outperformed during sustained gold rallies.
According to analysts at BCA Research, investors don’t necessarily need gold to surge again.
They simply need it to stabilize.
Recent price action suggests that may already be happening.
Gold has found support above the $4,000 level and ended July with its first monthly gain after four consecutive months of declines. Several technical analysts believe the recent weakness may have run its course.
Wall Street Sees Breakout Potential
Technical analysts have become increasingly optimistic.
Barron’s recently highlighted that the selloff in both gold and mining stocks may have been excessive.
Senior technical analyst Doug Busch believes the VanEck Gold Miners ETF is approaching a potential breakout, with a price target of approximately $110 by early 2027, representing more than 40% upside from current levels if the move materializes.
While technical forecasts are never guarantees, they add to a growing bullish case developing across Wall Street.
The Fundamentals May Be Even Better
The bullish argument isn’t based solely on charts.
Mining companies are generating enormous cash flow thanks to historically strong profit margins.
According to Gabelli Gold Fund portfolio co-manager Chris Mancini, many producers are earning more than $2,000 per ounce in operating margins.
Rather than aggressively expanding production, many companies are returning that cash to shareholders through:
- Dividend increases
- Share buyback programs
- Debt reduction
- Stronger balance sheets
Mancini says buying miners remains one of the least expensive ways to gain exposure to higher gold prices.
Among his fund’s largest holdings are:
- Newmont (NYSE: NEM)
- Agnico Eagle Mines (NYSE: AEM)
- Kinross Gold (NYSE: KGC)
- Northern Star Resources
- Endeavour Mining
One Big Advantage Over AI Stocks
Another reason strategists like gold miners is that they have very little exposure to the AI trade dominating today’s market.
Technology companies continue to trade at elevated valuations as investors pour money into artificial intelligence.
But many analysts worry expectations have become too optimistic.
BCA Research argues that diversified portfolios could benefit from businesses whose earnings aren’t dependent on AI spending.
Gold miners fit that description.
Unlike software companies, data centers, or semiconductor firms, mining businesses are driven primarily by commodity prices rather than advances in artificial intelligence.
That makes them an attractive diversification play if enthusiasm around AI begins to cool.
They’re Trading at a Rare Discount
Perhaps the strongest part of the investment case is valuation.
The VanEck Gold Miners ETF currently trades at just over 9 times next year’s expected earnings, according to FactSet.
That’s well below:
- Its five-year average valuation of roughly 14 times earnings
- The S&P 500, which trades near 19 times expected 2027 earnings
Historically, gold miners have traded at about a 25% discount to the broader market.
Today, that discount exceeds 50%.
If investor sentiment improves and valuations merely return to historical norms, the sector could see meaningful upside even without a dramatic rise in gold prices.
What Investors Should Watch
Gold mining stocks remain tied to the direction of gold prices, and another sharp decline in the metal would likely pressure the sector.
However, if inflation remains persistent, the Federal Reserve stays cautious, geopolitical risks continue, or investors begin rotating away from expensive AI stocks, many analysts believe miners could outperform both gold and the broader market.
After years of being overlooked, the sector may finally be setting up for a comeback.
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