Gold Miners and the VanEck Gold Miners ETF (GDX): Why the Bull Run Has Just Begun

The global gold market in 2025 is at a pivotal inflection point. While gold prices have surged to record highs, the equities that produce this precious metal remain stubbornly undervalued. This disconnect between the price of gold and the valuation of gold miners—particularly those tracked by the VanEck Gold Miners ETF (GDX) and its junior counterpart, GDXJ—presents a compelling contrarian opportunity. Structural shifts in supply dynamics, persistent earnings revisions, and a lag in Wall Street's price assumptions are converging to create a scenario where gold mining stocks are poised for a re-rating.

Contrarian Valuation: A Mispricing Waiting to Be Corrected

The VanEck Gold Miners ETF (GDX) trades at a P/E ratio of 12.50 and a P/Book ratio of 2.44 as of August 2025, while GDXJ, which focuses on junior miners, has a P/Book of 2.13. These metrics are historically low for a sector experiencing record profitability. For context, GDX's implied unit earnings in Q2 2025 reached $1,861 per ounce, a 77.6% increase from the same period in 2024. Yet, despite these fundamentals, the ETF trades at a 1.4x leverage to gold's bull market since October 2023, far below its historical 2x–3x range.

This valuation gap is not a reflection of weak performance but rather a failure of the market to fully price in the sector's transformation. Gold miners have optimized costs, strengthened balance sheets, and demonstrated operational discipline, yet their valuations remain anchored to outdated narratives of volatility and risk. The VanEck Junior Gold Miners ETF (GDXJ), with its higher leverage to gold price movements, offers an even more compelling case. Its P/Book ratio of 2.13 suggests that junior miners—often dismissed as speculative—are trading at a discount to their intrinsic value, despite outperforming gold bullion by 50% year-to-date.

Earnings Revisions: Wall Street's Blind Spot

The NYSE Arca Gold Miners Index (GDMNTR) has seen an 80% surge in earnings estimates through 2025, driven by gold and silver prices that have consistently outpaced Wall Street's conservative assumptions. Analysts have been slow to adjust their models, creating a meaningful gap between current market realities and consensus forecasts. For example, gold prices averaging $3,285 per ounce in Q2 2025—up 40.6% year-over-year—have generated record revenues of $23.98 billion for GDX's top 25 miners. Yet, many analysts still project gold prices below $3,000 per ounce for 2026, failing to account for structural tailwinds like central bank demand and geopolitical instability.

This analytical lag is a catalyst for outperformance. As earnings revisions continue to flow in, the market will be forced to re-evaluate the sector's potential. GDX's current valuation implies a 24%–63% upside if it reverts to historical leverage norms, assuming gold's bull market persists. For GDXJ, the potential is even greater, given its higher sensitivity to price movements and undervalued junior miner holdings.

Structural Supply Dynamics: A Bull Market That Won't Die

The structural forces driving the gold market are reshaping the industry. U.S. tariffs on gold bars, geopolitical fragmentation of supply chains, and reserve depletion are creating a new paradigm where gold's role as a hedge against inflation and currency debasement is no longer cyclical but structural. Central banks in China and India added 166 metric tons of gold to their reserves in Q2 2025 alone, signaling a shift toward de-dollarization and long-term diversification.

Meanwhile, production costs for major miners have stabilized at $1,250–$1,400 per ounce, allowing for robust margins at current gold prices. Junior miners, though riskier, are capitalizing on exploration projects with high-potential reserves, further extending the bull market's duration. The structural undercurrents—rising demand, constrained supply, and geopolitical uncertainty—ensure that gold's price trajectory is not a temporary spike but a sustained trend.

Investment Implications: A Contrarian Play on Resilience

The under-ownership of gold miners is a critical asymmetry. GDX and GDXJ have seen a 20% and 22% decline in outstanding units since early 2025, respectively, as investors have favored physical gold over equities. This divergence creates a fertile ground for a re-rating. For investors with a medium-term horizon, GDX offers a balanced exposure to the sector's fundamentals, while GDXJ provides amplified leverage to gold's price action.

The key is to act before the broader market catches up. Wall Street's lagging assumptions and the sector's undervaluation create a margin of safety for early adopters. As earnings revisions accelerate and structural supply constraints become more pronounced, the valuation gap between gold and its miners will narrow—potentially violently.

In conclusion, the bull run for gold miners is far from over. The combination of contrarian valuations, earnings revisions, and structural supply dynamics positions GDX and GDXJ as compelling long-term investments. For those willing to embrace the under-owned and undervalued, the next chapter in the gold story is just beginning.