Twenty years ago, VanEck launched a small fund on the NYSE Arca: the VanEck Gold Miners ETF (GDX). Its mission was simple—bundle the world's gold miners into a single line on a brokerage screen.
In May 2006, gold traded around $650 an ounce, and the financial world was enthralled with housing-credit innovations.
Fast-forward to May 2026: GDX has soared 139% since inception, and the industry it tracks is in the midst of its strongest rally since gold's last great bull market.
Gold has surged above $4,500 an ounce after delivering its strongest annual performance since 1980 in 2025, when the precious metal rallied 65%.
And yet, looking at where miners trade today versus what they earn, the case is arguably stronger now than at any point in those two decades.
Gold Miners Are Generating Record Cash Flows
“At current gold prices, these companies are already generating record cash flow,” VanEck portfolio manager Imaru Casanova wrote earlier this month, pointing to the Q1 2026 earnings season for miners as evidence of the shift.
Newmont Corp. (NEM) and Agnico Eagle Mines Ltd. (AEM), the two largest holdings in GDX and the world's two largest gold miners, both reported record quarterly earnings.
Newmont posted record free cash flow of $3.1 billion.
Agnico Eagle delivered record operating margins on a realized gold price of $4,861 per ounce against all-in sustaining costs of $1,483 per ounce. That is a cash margin of nearly $3,400 on every ounce sold.
Both companies ended the quarter with roughly $3 billion in net cash and reaffirmed their full-year 2026 guidance.
The mining industry, according to Casanova, is in strong financial and operational health by historical standards, even as valuations across the sector remain relatively low compared to where the fundamentals would suggest they should trade.
The Miners' Margin Story
The cash-flow math explains why analysts keep raising price targets even after a 100%-plus year for the mining sector.
Gold mining is a fixed-cost business.
With industry all-in sustaining costs around $1,800 per ounce, every ounce sold at $4,500 generates roughly $2,700 in cash margin.
That number was closer to $400 five years ago. When gold rises by $100 an ounce, the cost base barely moves, so the entire move drops through to earnings.
A 10% rise in the gold price has historically translated into 20%-30% earnings growth for miners, VanEck estimated.
The trailing twelve-month price-to-earnings ratio across the top 25 GDX holdings as of first-quarter 2026 reporting sits at 20.2x. That's the lowest level in at least 40 quarters of consistent data.
Many senior producers trade at low- to mid-single-digit P/E multiples despite share prices near all-time highs. Earnings have simply grown faster than stock prices.
The shifting inflation expectation framework is also worth flagging.
The University of Michigan's April survey showed 1-year consumer inflation expectations at 4.7% and 5-year at 3.5%, while the 5-year TIPS breakeven sits near 2.7%.
According to Casanova, if bond markets begin closing that gap, she argued, a Fed on hold could quickly translate into near-zero or negative real rates, “a backdrop that has typically been among the most favorable environments for gold.”
Who Is Actually Buying The Gold In 2026
The first-quarter 2026 demand picture is the part that explains why central banks have become the dominant story.
According to the World Gold Council's Gold Demand Trends report cited in Casanova's note, global gold demand totaled 1,231 tonnes in the first quarter of 2026, up 2% year over year in volume terms.
The dollar value of that demand surged 74% to roughly $193 billion, thanks to higher prices.
Central banks added 244 tonnes during the quarter, a 3% increase year over year, even with reported sales from Turkey, Azerbaijan and the Central Bank of Russia.
Net buying came from Poland, Uzbekistan and China, alongside newer participants including Guatemala, Cambodia, Malaysia, Serbia and the United Arab Emirates.
The shift in bar and coin demand was more dramatic. Physical investment buying surged 42% year over year to 474 tonnes, one of the highest quarterly levels on record, with Asian investors driving most of that flow.
ETF demand was a notable exception. Gold-backed ETFs took in just 62 tonnes in the quarter, well below the 230 tonnes seen in the same period last year, as U.S. funds experienced outflows in March.
Gold has averaged $4,780 per ounce since the outbreak of the war with Iran.
“A return of Western investor participation could provide additional support and may contribute to further upside in the gold market,” Casanova said.
