Massive Margins Point to Gilded Road Ahead for Gold Equities, Experts Say

Gold miners remain undervalued to the metal itself, which is soaring in 2025. But according to experts, with margins higher than ever, many junior explorers could be set to benefit.

Gold miners have experienced a remarkable recovery in 2025, rising over 120% year-to-date, yet they remain fundamentally undervalued compared to the metal itself, according to global investment firm VanEck in a November 7 piece titled "Gold in 2025: A New Era of Structural Strength and Enduring Appeal."

"With all-in sustaining costs averaging around US$1,600/ounce, nearly every producer remains profitable at current prices" of over US$4,300, "resulting in record margins across the industry," the report said. "Miners are displaying improved capital discipline and stronger balance sheets a key differentiator from previous cycles when high prices often led to overspending."

Gold prices remained near their highest level in over seven weeks on Monday, bolstered by expectations of further U.S. Federal Reserve rate cuts and a weaker dollar. Gold futures increased by 1.2% to US$4,381.10 per ounce, while spot gold rose 1.3% to US$4,349.73, Yahoo Finance UK Reporter Pedro Goncalves reported on December 15.

"Gold is likely to remain well bid into US non-farm payrolls, as evidence of labor market slack would keep front-end yields capped and the dollar weak, supporting a push toward US$4,380 to US$4,440 after a firm rebound from the US$4,243 support zone," said Kelvin Wong, senior market analyst at OANDA, according to Goncalves.

Investors are currently anticipating two rate cuts next year, with this week's U.S. jobs report seen as a crucial test of those expectations.

"Gold trades sharply higher above US$4,345, closing in on its all-time high as the macro backdrop turns supportive with the Fed cutting again, and we could see a year-end run higher," said Neil Wilson, UK investor strategist at Saxo Bank. Non-yielding assets like gold typically benefit from a lower interest rate environment.

'An Exceptional Year' for Gold

According to Frank Holmes writing for U.S. Global Investors on September 15, "Gold mining stocks are experiencing an exceptional year in 2025."

"The price of gold has reached one record high after another, and the mining companies extracting it are delivering some of the best returns in the market today," Holmes noted. "It's rare to witness such a strong alignment of factors benefiting this industry. From central bank purchases to political uncertainty and disciplined corporate practices, everything seems to be aligning perfectly for gold and the miners who produce it."

Gold has risen even further since Holmes wrote, indicating the continuation of the trend. VanEck, in its November 7 article, agreed with that perspective on the metal's future.

"Gold has the potential to trade even higher in 2026," the firm noted. "In recent years, strong rallies, such as the one gold has recently been enjoying, have often been followed by periods of consolidation around an established higher level, with the metal trading in a sideways pattern until a new catalyst emerges to drive prices even higher. Gold tends to outperform during later phases of inflationary cycles, when investors seek protection from social, geopolitical, and financial instability."

Gold was built for the shifting trends currently unfolding in the global economy: inflation, war, uncertainty, and growing financial instability. As of late 2025, gold continues to outperform major equity benchmarks, including the S&P 500, over multiple time horizons, VanEck said. In the past 12 months alone, gold has more than doubled the returns of the S&P 500 Index. As these trends continue to unfold and reshape the global economic landscape in the coming years, gold has the potential to rise toward US$5,000 per ounce.

"A rising gold price environment has historically been accompanied by strong performance by gold equities," the firm continued. "The sector outperformers must also demonstrate that they are fundamentally positioned and have a sound strategy that will translate higher gold prices into improved cash flow and higher returns, which will deliver growth."

Organic growth does not come easy in the gold sector, the piece said. Finding new gold deposits, or defining/expanding existing ones, is a difficult, lengthy, and capital-intensive process. Most senior and mid-tier companies struggle to simply replace their annual production. To significantly expand their depleting reserve and resource base, companies generally must acquire other companies or assets. All things equal, the more advanced a project is, the higher its valuation and the faster the company can deliver growth.

Gold's Rise Expected to Continue

Several Wall Street firms have released reports indicating that analysts and investors anticipate the rise in gold prices to continue in 2026, with some predicting it could reach US$5,000, wrote Investopedia Executive Editor of News Stephen Wisnefski on November 28.

He said many of the factors that have driven investors to invest in this traditional safe-haven asset are expected to persist, experts suggest.

Deutsche Bank raised its 2026 gold price forecast to US$4,450 from US$4,000, projecting a range of $3,950-$4,950, Wisnefski said.

"Third quarter supply-demand data supports a continued central bank bid. The positive structural picture shows inelastic demand from central banks and ETF investment diverting supply from the jewelry market," Deutsche Bank noted in a message to clients, according to the author. "Also, overall growth in demand outpaces supply."

On Tuesday, the gold market continued to test new support around US$4,300 and attracted modest bullish momentum as the U.S. labor market remains relatively resilient but shows signs of slowing, according to a report by Neils Christensen for Kitco News on December 16.

According to a report on Companiesmarketcap.com, the companies with the top margins in the industry include the majors you would expect: Franco-Nevada, Barrick, Agnico Eagle, and Newmont. At the top of the list is ASA Gold and Precious Metals with an operating margin of nearly 97%.

However, many smaller and junior explorers have seen their share prices rise or could be in a clear position to take advantage of gold prices and improved margins to extend their drilling campaigns and expand their resources, including West Red Lake Gold Mines Ltd., Dryden Gold Corp., and NexGold Mining Corp.

West Red Lake Gold Mines Ltd.

West Red Lake Gold Mines Ltd. (WRLG:TSX.V; WRLGF:OTCQB; FRA:UJO) has initiated a fully funded 3,000-meter surface diamond drilling program at the Fork Deposit, situated roughly 250 meters southwest of its wholly owned Madsen Mine in Ontario's Red Lake Gold District.

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West Red Lake Gold Mines Ltd. (WRLG:TSX.V; WRLGF:OTCQB; FRA:UJO)

This infill program aims to enhance resource confidence in a shallow, high-grade zone identified during a 2024 reassessment of the deposit. Fork is one of several satellite deposits owned by the company and currently contains an Indicated mineral resource of 20,900 ounces with a grade of 5.3 grams per tonne (g/t) gold, along with an additional Inferred resource of 49,500 ounces grading 5.2 g/t gold.

The current program targets a low-plunging zone of mineralization that previous studies have shown to have a footprint of 400 meters by 250 meters. According to the company, the average thickness of this zone is estimated at about 2 meters based on existing core length intercepts.

The company highlighted the near-surface nature of the mineralization, with planned drill holes averaging 170 meters in depth. The proximity to existing underground infrastructure at the Madsen Mine, particularly Level 3 of the McVeigh zone, offers logistical advantages for future development planning.

Shane Williams, President and CEO, stated in the company's news release, "The shallow nature of the deposit will allow for efficient definition drilling from surface and, with its high grades and proximity to existing underground development, it is easy to envision this core zone of Fork becoming part of the production pipeline at Madsen, based on successful infill drilling results."

On November 26, Analyst Paul O'Brien of Velocity Trade Capital said the firm was maintaining its target price of CA$2.05 per share and its Outperform rating for West Red Lake following the company's announcement of the drilling program at the Fork deposit, located 250 meters southwest of the Madsen mine.

Fork, which currently holds a shallow Indicated and Inferred resource of approximately 80,000 ounces of gold, can be drilled from the surface and is situated close to Madsen's existing underground development, which can be extended or connected from Level 3, the analyst said.

"The capital required we expect to be modest (