Gold’s extraordinary run in 2025 has left the mining sector looking unusually well-behaved.
That, at least, is the story told in RBC Capital Markets’ latest precious metals outlook, which argues that producers have entered a phase of financial tidiness not seen in previous bull markets.
It is an appealing narrative: companies that traditionally overspent in good times are instead paying down debt, keeping a lid on costs and sending more cash back to shareholders. Whether the spell lasts is another matter.
RBC’s starting point is the gold price itself. The metal has surged roughly 60% this year, the analysts say, outpacing every major asset class. They expect the rally to continue, forecasting an average of $4,600 an ounce in 2026 and a year-end figure closer to $4,800.
To put that in context, gold averaged $2,387 last year. The drivers are familiar but powerful: central banks stocking up on non-sovereign assets, investors looking for protection in a world of geopolitical tension, and the expectation that monetary policy will eventually loosen even if inflation remains above target.
If there is a risk to this sunny view, it lies in economic growth being stronger than feared. A buoyant US economy could push bond yields and the dollar higher, tempting investors to rotate out of safe havens. Still, the bank thinks the broader backdrop is supportive enough for gold to grind higher.
The more interesting part of the outlook concerns the miners themselves. With margins fattened by the gold price and cost inflation less aggressive than in recent years, producers have posted exceptional share price gains, about 139% year to date across the group, according to RBC’s figures.
But instead of embarking on the sort of spending binge that scarred past cycles, they have kept balance sheets in good health. Net debt, across the top 25 gold producers, is effectively at zero. Return of capital has picked up too: RBC estimates that large-cap producers offered a 2.4% shareholder yield this year, rising to 3.2% in 2026 on its forecasts, which is closer to the S&P 500’s trailing 3% yield.
In a sector where pro-cyclical behaviour (spending more as prices rise, not less) often destroyed value, this restraint counts as progress. The analysts make a point of noting that reserve calculations will likely remain conservative, using price assumptions below $2,000 an ounce. That helps avoid the creeping optimism that has previously pushed companies into projects justified only by exuberant commodity forecasts.
Yet even this more sensible sector is not without near-term issues. RBC warns of “interim headwinds” as companies begin issuing guidance for the first quarter. The bank’s own 2026 forecasts are more cautious than the market’s: it expects production to come in 1% below consensus, all-in sustaining costs (AISC) 8% higher and capital spending 11% higher.
Capital expenditure in particular is likely to rise because producers, flush with cash, will feel encouraged to accelerate work on their existing projects. RBC estimates a 25% rise in capex across the large caps next year; it also expects AISC to tick up by 9%. None of this is dramatic, but it may set up a run of earnings downgrades.
Which companies look most vulnerable? The report highlights Agnico Eagle Mines Ltd (TSX:AEM) Barrick Gold Corp. (TSX:ABX, NYSE:GOLD) and Kinross Gold Corporation (TSX:K) as having the greatest downside risk relative to consensus expectations.
AngloGold Ashanti (ASX:AGG), by contrast, could offer modest upside. On the royalty side (businesses such as Royal Gold and Osisko Royalties that take a share of mine revenue rather than operate sites themselves) RBC notes that valuations have compressed, making them a lower-risk option into guidance season. Whereas the analysts maintain their broadly positive stance on producers, they see a tactical opportunity in these royalty names.
Valuations overall look reasonable. At spot gold prices, the bank reckons producers trade on 1.12 times net asset value, 6.2 times enterprise value to EBITDA and 12.2 times earnings, all comfortably below the S&P 500 equivalents.
Free cash flow yields of more than 7% compare favourably with the wider market. In other words, despite the dramatic rally, the sector is not obviously overstretched. RBC calculates that current valuations imply a gold price of about $3,900 an ounce, well below today’s levels.
For UK investors, the most relevant names are those with London listings or sizeable operations linked to the London market. Fresnillo PLC (LSE:FRES) and Hochschild Mining PLC (LSE:HOC, OTCQX:HCHDF) appear in the wider coverage, though the bank’s top ideas are more international: AngloGold and Gold Fields Limited (ADR) (NYSE:GFI) among the large caps.
Lower down Royal Gold, Inc. (TSX:RGL) and Osisko Gold Royalties (TSX:OR) figure among royalty plays and a grab-bag of mid-tiers, including Torex Gold Resources Inc (TSX:TXG), Equinox Gold (TSX:EQX) and Eldorado Gold Corp (TSX:ELD) also feature. These are hardly household names, but gold miners rarely are.
The bigger question is whether the industry’s newfound discipline persists. High prices have a way of loosening purse strings. But for now, at least, gold miners are enjoying an unusual combination of strong margins, tidy finances and a supportive macro backdrop. It may not be out of the ordinary for long, but it is, for the moment, a pleasant surprise.