Despite a 155% rally in the last year, gold miners – as tracked by the VanEck Gold Miners ETF (NYSE:GDX) – remain historically undervalued, with multiple market metrics suggesting there’s still significant upside potential.

According to Kip Herriage, managing partner and founder of Vertical Research Advisory, the gold miner sector is in what he calls an "historic dislocation," where prices of mining stocks reflect gold at $2,000 to $2,500 per ounce — even as physical gold trades above $5,000/oz.

“Multiple industry metrics indicate that gold miners are trading at discounts we've never before seen, making them historically cheap despite gold's strength and the moves seen to date,” he added.

A Rally Still In The Early Stages

In a post on social media X Monday, the expert highlighted that the gold mining sector’s rally is still in its early phases.

The total market capitalization of all global gold miners stands at just $1 trillion, Herriage said, highlighting how the sector is still smaller than Walmart Inc. (NYSE:WMT), whose market cap exceeds $1.1 trillion.

"This is not normal," he said. "Gold miners represented over 10% of global equities in past decades. Today, they account for just 1%."

Gold itself comprises only 1%–2% of all global portfolio assets, based on Morningstar and VanEck data.

That figure has remained stagnant even as the yellow metal surges. "Gold may have to surpass $10,000 before investors allocate just 5% to the sector," Herriage said.

He pointed to extreme underinvestment, with capital expenditures (CAPEX) at all-time lows relative to gold prices, and said large mining companies have not yet begun to aggressively reinvest in new reserves.

On a valuation basis, senior gold miners trade at 0.75x net asset value (NAV), while junior miners are at just 0.51x, far below historical norms.

The macro backdrop remains supportive.

Central banks continue buying physical gold at record pace, while trust in fiat currencies remains fragile. Yet the miners — which typically offer leverage of 2x to 3x the move in physical gold — remain off most investors' radar.

"The leverage is always in the miners," Herriage said.

"We expect this group could 10x in the next 3 to 4 years. If gold hits our target of $15,000/oz and silver $300/oz, the upside is 20x."

Wall Street Sees Strong 2026 Setup

Bank of America echoes this bullish sentiment, naming gold miners a top pick for 2026.

Analyst Lawson Winder said the firm remains positive on the sector due to several tailwinds, including geopolitical instability, a weakening U.S. dollar, and supportive industrial policy, like the recently expanded U.S. critical minerals stockpile.

The firm’s commodities strategist Michael Widmer sees gold potentially breaking above $6,000/oz, which he believes justifies further upside in mining stocks.

Even after a triple-digit return year, the investment bank notes that that valuations remain low, with the median forward price-to-earnings ratio (PE) of gold miner ETFs at 31.7, still below historical averages.

Positioning remains underwhelming, as gold miner ETFs have seen net outflows of $2.2 billion over the past year, a 12.5% drop — a sign that retail and institutional portfolios remain light in exposure.

Image via Phawat/Shutterstock

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