
Gold is poised to achieve its most favorable quarterly performance since 1986. The recent quarterly gains in gold now closely approach the significant increase observed in 1986, coinciding with the Chernobyl disaster. The comparison is compelling; however, it is overshadowed by the performance of gold miners, which analysts on Wall Street suggest may continue to appreciate. The most actively traded Gold futures contract experienced a 19.3% increase in the first quarter, concluding at $3150.30 on Monday. This marks its strongest performance since the third quarter of 1986, during which it achieved a 24% gain. Gold has achieved 18 consecutive closing highs in 2025.
The demand is being driven by central banks in nations like China, which are acquiring gold bars to mitigate their reliance on the U.S. dollar and the associated geopolitical pressures, particularly following the freezing of Russian central bank assets. Retail investors are increasingly acquiring gold at retailers such as Costco, where bars rank among the leading sales categories, and through physically backed exchange-traded funds, which have experienced a growth in assets under management. The surge in gold prices has consequently bolstered the stock values of mining companies engaged in its extraction. Gold miners, represented by the VanEck Gold Miners ETF, have experienced a 34% increase in 2025 to date, including dividends. This performance surpasses that of gold itself and positions them for their strongest quarter in approximately five years. Returns for miners fell short of gold in the last quarter, and over the past decade, they have underperformed gold by 17%, indicating that a potential reversal in their fortunes may be on the horizon.
UBS analyst Daniel Major posed the question in his note on Monday morning: “Gold stocks are finally working…will it continue?” Theoretically, an increase in gold prices should lead to superior performance from gold miners due to growth potential and dividend yields. However, this has not materialized, as miners face ongoing challenges in replacing depleting resources and expanding production while simultaneously managing inflationary pressures on costs, Major noted. The theory complicates long-term recommendations for miners; however, in the short term, Major finds the current conditions favorable. “Given that gold prices have surpassed $3,000 per ounce, we anticipate that the consensus on earnings will likely be adjusted upward in the forthcoming weeks,” he stated. The prevailing market forecast anticipates aggregate earnings of $3.10 for the year 2025.
The valuation appears to be quite favorable as well. The exchange-traded fund is currently priced at 14 times its projected earnings over the next 12 months, which is below its decade-long average of 20.08 and its five-year average of 16.2 times. The disparities between the historical average and the present enterprise value to EBITDA, or earnings before interest, taxes, depreciation, and amortization, valuation are less pronounced, yet they convey a comparable narrative. Investors may find the iShares MSCI Global Gold Miners ETF appealing, particularly due to its marginally lower expense ratio of 0.39% compared to VanEck’s 0.510%. Expense ratios hold significant importance as they diminish returns over the extended horizon. iShares, with assets under management totaling $1.3 billion, represents a small portion relative to VanEck’s $14.8 billion. However, a fund exceeding a billion in AUM typically indicates that investors can transact in and out of the ETF without significant concern.
Exchange-traded funds provide an effective mechanism for investors to gain exposure to the top 40-60 gold mining equities within the broader market. Investors aiming to select individual gold mining stocks may find Newmont appealing, as it has received a Buy rating from analysts at BofA Securities and represents the largest holding in both the iShares and Vaneck ETFs. Newmont anticipates a decline in gold production, projecting a decrease to 5.9 million ounces in 2025, down from 6.85 million ounces recorded in the previous year. However, should gold prices remain stable, it could still yield significant advantages, particularly due to its status as the leading gold producer globally.
BofA’s commodity strategist has revised their forecast for gold prices to $3,500 per ounce, anticipating a 10% rise in investment demand. UBS’ Major expresses a favorable view on Barrick. The company, in its annual report released this month, indicated that it is projecting a potential resumption of production in Mali’s gold mines on April 1, although it provides no guarantees regarding this timeline. The analyst perceives this as a favorable driver for the stock’s performance.
There is a necessity for improvement, as it has lagged behind the VanEck ETF by over 13 percentage points on an annual basis during the past three years. It is noteworthy that gold has experienced a bull market since September 2022, suggesting it may be overvalued and susceptible to corrections should early investors decide to realize their profits. This suggests that elevated forecasts for gold may merely be following the asset’s price momentum. Market participants are keenly aware of the potential for gold prices to escalate significantly, and no one wishes to find themselves positioned unfavorably in such a scenario.