Unloved but Unstoppable: Betting Big on Gold Miners

Gold is on a tear, surging more than 60% since early 2024. At first glance, such a sharp rally might seem overextended. But if history teaches us anything, it’s that when gold runs, it really runs. The weakest gold bull cycle in recent decades (2007–2011) saw prices nearly triple, making today's rise look like a warm-up.

Central Banks: A Relentless Buyer

The primary driver behind gold’s strength today is clear—a massive, price-insensitive buyer: central banks. China is the largest of them; and at current pace, it would take a lot of years of continued buying to reach its rumored reserve targets. In other words, there’s a persistent, non-economic bid under the market – a buyer that keeps accumulating regardless of price. And as investors, we love this backdrop.

Meanwhile, despite some recent media attention, gold remains drastically under-owned. Surveys indicate roughly 70% of investment advisors hold less than 1% in gold, and family offices report similarly paltry exposure. Contrast that with 40 years ago, when gold comprised over 20% of the average portfolio. When sentiment eventually shifts and investors return to even a modest 2–5% weighting, that wall of new money will be an additional rocket fuel for gold prices on top of the central bank bid.

Gold Miners: Cash-Flow Machines with Explosive Upside

So, how best to play this golden theme? Look to the most unloved sector of the past 15 years – gold miners. Despite all the hate and bad memories, you can’t deny that at these gold prices the mining companies are minting cash. When the price of your product soars faster than your costs, profit margins explode – and that’s exactly what we’re seeing in gold miner earnings now.

Miners are our favorite way to play gold’s bright future — we’ve allocated over 10% of our portfolio to this space. Gold has already blown past its previous cycle peak, yet major gold mining stocks still languish more than 50% below their own highs. They have a long way to catch up and then overtake gold price since miners are a leveraged play on gold: when gold rises, mining shares rise even more. The fact that miners have lagged so badly this time only means a potential spring coiled for outperformance.

Efficient Exposure: GDX and GDXJ ETFs

There are a couple of ways to get in on this opportunity. You could pick your favorite individual mining stocks, but an easier approach is to use ETFs. The two flagship VanEck Gold Miners ETFs cover the spectrum: GDX (large-cap gold miners) and GDXJ (junior miners). Together, these two give you a diversified stake in both the established producers and the smaller, more explosive names poised to thrive as the cycle unfolds.

Importantly, the gold mining sector is tiny and under-owned. To put it in perspective, the entire global gold mining industry’s market capitalization is only about one-fifth the size of Apple. This means that even a small shift of capital from today’s bloated mainstream assets into this overlooked sector – could yield outsized returns. In a space this undercapitalized, incremental inflows can translate into dramatic upside moves.

Don’t Miss This Golden Ticket

Gold’s bull run is alive and well, driven by relentless central bank buying and historically low investor allocations. The miners—under-owned, cash-rich, and leveraged to rising gold prices—represent an extraordinary asymmetric opportunity. For investors who recognize the bigger picture, gold miners may just be the most compelling trade of this decade. Don’t miss this golden ticket.

Dmitrijs Brizgalovs
Investment Portfolio Manager
BluOr Bank

Prepared for publication RankiaPro Magazine, No. 22, 2025, June