Seasoned investors know that market landscapes are constantly shifting. While certain sectors command headlines for years, others quietly bide their time, waiting for their moment in the sun. In the accompanying video, veteran investor Clive Thompson shares invaluable insights gleaned from over five decades in the markets, identifying a sector he believes is poised for significant growth: gold mining stocks.
For many years, the allure of technology and artificial intelligence has drawn the lion’s share of investor attention and capital. However, smart money often looks beyond the obvious, seeking out undervalued assets with strong fundamentals and compelling catalysts for future growth. According to Thompson’s analysis, the gold mining sector represents just such an opportunity, making now a particularly opportune moment to consider these equities.
Understanding the Allure of Gold Mining Stocks Today
Gold mining stocks, for a prolonged period stretching over a decade and a half, have largely been ignored by the broader investment community. This neglect, however, has inadvertently created a unique scenario. The sector has become remarkably undervalued, presenting a compelling investment thesis for those willing to look beyond current fads.
1. The Sector’s Compressed Valuation
The sheer scale of undervaluation in the gold mining sector is striking. Thompson highlights that the entire global gold mining sector is valued at approximately $691 billion. To put this into perspective, individual technology giants like Microsoft command a market capitalization six times larger than the entire gold mining industry combined. Similarly, at least 14 other major companies, including Oracle ($713 billion), JPMorgan Chase, Walmart, and Amazon, each individually surpass the entire gold mining sector’s valuation. This disparity means that even a modest shift of capital from the massive tech sector into gold mining could create an extremely leveraged positive effect on gold mining stock prices, pushing them significantly higher.
Imagine the stock market not as one vast ocean, but as a collection of diverse ponds. While the tech pond has swollen to enormous proportions, housing many ‘whales,’ the gold mining pond has remained comparatively small, with its own ‘fish’ often overlooked. A small ripple from the tech pond could cause a tidal wave in the gold mining pond, simply due to its diminutive size. This “sector rotation,” where institutional money begins to flow out of overvalued areas and into undervalued ones, is precisely what Thompson believes is beginning to happen.
2. Gold’s Enduring Appeal in Uncertain Times
The price of gold itself is a critical driver for mining stocks. Thompson posits that the gold price is likely to remain high, and potentially move even higher, due to several macroeconomic factors:
- Rising Geopolitical Tensions: Global instability often drives investors towards safe-haven assets like gold, which historically maintains its value during times of crisis.
- Mounting Government Debt: The unprecedented levels of government debt across major economies raise concerns about currency debasement and inflation, prompting a flight to tangible assets.
- Uncertainties Surrounding the Dollar: As the world’s reserve currency, any wavering confidence in the U.S. dollar can bolster the appeal of alternative stores of value like gold.
These factors collectively create a strong fundamental backdrop for a sustained high, or even rising, gold price. Indeed, the gold price has already seen a significant uptick, rising 26% this year (2025) from $2,658 to approximately $3,360. This increase often means that many analyst forecasts for gold mining companies, made earlier in the year when gold was lower, are now out of date and likely underestimate future earnings and share price potential.
Identifying Quality Gold Mining Investments
Not all gold mining stocks are created equal. Thompson emphasizes a crucial distinction between established, profitable miners and highly speculative exploration companies. His preference lies firmly with the former:
What to Look For: The ‘Diggers and Sellers’
Thompson favors companies that are already actively mining gold, selling it, and generating profits. Key characteristics of these preferred gold mining companies include:
- Proven Reserves: Companies with substantial gold in the ground ensure a pipeline of future production. This is akin to a baker having a well-stocked pantry; they can continue to produce without constantly searching for new ingredients.
- Profitability: They must sell their gold for more than it costs to extract, ensuring sustainable operations and shareholder returns.
- Growth in Production: Preference is given to companies likely to increase their gold output in ounce terms year-over-year, indicating expanding operations or new mines coming online.
- Strong Financial Health: Many large miners, having weathered the lean years, boast low or no debt and significant cash reserves. These ‘war chests’ provide resilience and opportunities for strategic acquisitions or expansions.
Avoiding the ‘Holes in the Ground’: The Speculators
On the other end of the spectrum are exploration companies. These ventures are primarily focused on discovering new gold deposits. While some may indeed strike it rich and become “40-baggers” (a stock that appreciates 40-fold), many will ultimately result in nothing more than unproductive “holes in the ground.” Investing in these companies is highly speculative, often based on geological hints and optimistic projections that rarely materialize. Thompson’s approach prioritizes companies with tangible assets and current profitability, reducing the inherent risk.
Historical Performance: Gold vs. Gold Miners
A historical perspective reveals an interesting divergence. While gold has been an exceptional long-term performer, its mining companies have often lagged. Since 1968, the gold price has surged by an astounding 9,500%, increasing nearly 100-fold from $35 to almost $3,500 an ounce. In comparison:
- Agnico Eagle Mines (AEM): Rose approximately 4,500% since 1968.
- Barrick Gold (B): Increased by about 3,500% since 1968.
- Wheaton Precious Metals (WPM): Saw a gain of roughly 2,900% since 1968.
- Newmont Mining (NEM): Gained approximately 435% since its chart start (not 1968).
- GDX (ETF): Up only 40-50% since 2006.
However, this trend might be reversing. Notably, Wheaton Precious Metals has been an outlier, massively outperforming gold itself since the 2008 Global Financial Crisis, with a 1,000% increase compared to gold’s 450%. More recently, in the current year 2025, Thompson notes that several gold mining stocks have started to outperform the gold price itself, signaling a potential shift in investor sentiment and the beginning of institutional money returning to the sector. This early movement by “smart money” often precedes a broader public interest, which could further amplify gains in the coming years.
Top Gold Mining Stock Selections
After extensive research, Thompson has identified 10 gold mining stocks he believes offer exceptional growth prospects, with two standing out as particularly outstanding. These recommendations are based on his personal opinion and rigorous analysis, not investment advice.
A Curated List of Promising Gold Miners
Here are 10 companies Thompson highlights, focusing on those already digging and profiting:
- Newmont Corporation: The largest gold mining stock in America, with a substantial market capitalization of around $75 billion. Its sheer size offers stability in the sector.
- Harmony Gold: A South African company with mines primarily in South Africa, boasting a market cap of 171 billion South African Rand.
- Torex Gold Resources (TSX: TXG): A Canadian company currently trading at a low price-to-earnings (P/E) ratio of 8.5 times, forecast to drop to 7.6 times next year. A low P/E ratio can indicate an undervalued stock relative to its earnings.
- Equinox Gold (TSX: EQX): Another strong contender in the gold mining space.
- Centerra Gold (TSX: CG): A Canada-based company with gold and copper mines across North America, Turkey, and other regions. It has a P/E ratio of 7.68 and offers a dividend yield of 2.85%.
- Perseus Mining Limited (ASX: PRU): An Australian company, known for its operations primarily in Africa.
- B2Gold Corp (TSX: BTO): A Canadian company with a P/E ratio of 8.34 times, expected to fall to 5 times next year. Its low forward P/E suggests strong projected earnings growth.
- Sibanye Stillwater (JSE: SSW): A South African company that diversifies beyond gold into silver, platinum, and palladium. This diversification can offer additional revenue streams and risk mitigation.
Thompson’s Two “Absolutely Fantastic” Picks
Among his top 10, two companies particularly stand out for their potential to significantly outperform:
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Ramelius Resources Limited (ASX: RMS): An Australian company mining gold exclusively within Australia, significantly reducing political risk.
- Market Cap: A$5.3 billion (medium-sized).
- Valuation: 2025 P/E ratio of 7.48 times, projected to drop substantially to 5.67 times in 2026.
- Dividends: Offers a dividend yield of 3.34% this year, expected to rise to 2.75% (based on current share price) with increased production.
- Growth Drivers: Recently acquired Spartan Resources, which is expected to boost its production by an impressive 500,000 ounces per year by 2030.
- Financial Strength: Strong cash position, enabling self-funded mining activities without reliance on debt. Its low production costs further bolster profitability.
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Westgold Resources (ASX: WGX): Another Australian miner with significant growth on the horizon.
- Production Growth: Production is forecast to surge by 60% in 2026, a substantial increase in output.
- Profitability: Maintains very large margins, indicating high profitability from its gold operations.
- Strategy: Unlike some peers, Westgold does not hedge its gold production, allowing it to fully benefit from rising spot gold prices.
- Valuation: Thompson projects a P/E ratio of 5.6 times for next year, closely aligning with analyst forecasts of 5.7 times.
- Dividends: Estimated forward yield of 1.78%.
Investing in Gold Mining ETFs
For investors seeking broader exposure to the gold mining sector without picking individual stocks, Exchange Traded Funds (ETFs) offer a diversified approach. Thompson mentions two primary VanEck Gold Mining ETFs:
- GDX (VanEck Gold Miners ETF): Comprises large gold mining companies globally.
- GDXJ (VanEck Junior Gold Miners ETF): Focuses on smaller and mid-sized gold mining companies, often referred to as “juniors.” These can offer higher growth potential but also come with increased risk compared to the larger, more established miners.
Both GDX and GDXJ have shown strong performance in 2025, potentially outperforming the broader stock market for the first time in decades. This further supports the argument for a significant sector rotation into gold mining stocks, suggesting that these currently cheap assets have considerable upside potential.
In the dynamic world of investment, recognizing undervalued opportunities before they become mainstream is key. As institutional funds begin their migration towards the historically overlooked gold mining sector, investors keeping a keen eye on these trends could position themselves for substantial long-term gains. Always remember, before making any investment decisions, conduct your own thorough due diligence and consult with a qualified financial advisor who understands your personal financial situation and risk tolerance.
Blasting Off: Your Gold Mining Stock Q&A
What are gold mining stocks?
Gold mining stocks represent shares in companies that actively extract gold from the ground, process it, and then sell it. Investing in them means you own a part of a company involved in the gold production process.
Why are gold mining stocks considered a good investment opportunity right now?
The gold mining sector is currently seen as undervalued compared to other industries, and the price of gold is expected to remain high or increase. This is due to factors like global instability, rising government debt, and uncertainties about the U.S. dollar.
What kind of gold mining companies should a beginner investor look for?
Beginners should focus on established companies that are already actively mining, selling gold, and making a profit. These companies typically have proven gold reserves, strong financial health, and a history of increasing production, rather than just exploring for new deposits.
How can I invest in the gold mining sector without choosing individual stocks?
You can invest in the gold mining sector through Exchange Traded Funds (ETFs). These funds, like GDX or GDXJ, hold a diversified collection of gold mining companies, providing broader exposure without you having to pick individual stocks.
