Gold prices hit record highs in 2025, drawing significant attention. But, as Bank of America’s global research points out, things aren’t as straightforward as they seem. Even with the gold industry thriving, it hasn’t fully regained the levels that defined earlier peaks, especially in comparison to the broader stock market and its historical valuations.
This year has seen gold prices soar, largely due to its traditional role as a hedge against inflation and economic instability. On September 2, gold surpassed $3,500 per ounce, rising to $3,600 by the following Monday after lackluster U.S. employment figures for August, leading to expectations of looser monetary policy. The BOFA commodities team has stated that the average quarterly price could reach $4,000 per ounce by the second quarter of 2026.
Rob Howarth, a senior investment strategist at US Bank Wealth Management, mentioned that while gold might be a wise choice for some, it’s not exactly liquid. “You can’t just use gold for a pizza order,” he quipped. Recently, central banks have driven interest in gold as they buy more of the metal, thanks partly to a weakening U.S. dollar and nations like China looking for alternatives.
Bank of America emphasizes that context matters when evaluating gold’s high prices. It’s really about perspective.
The market capitalization of the sector doubles its past peak…
The global gold sector’s market capitalization has nearly doubled from the peaks of $33.1 billion seen in 2011 and 2020, and has notably surpassed the $70 billion low from 2016, hitting over $170 billion in 2022. Interest from investors has surged, driven by inflation and rising costs within the sector.
However, when contrasting gold’s rise to the overall global equity market, the increase looks less impressive. Currently, gold occupies about 0.39% of global market capitalization, consistent with the 2020 peak but still far from the 0.71% seen in 2011. If gold returns to the latter’s percentage, it could mean a market cap nearing $990 billion.
Running room
Despite sky-high gold prices, gold stocks are not reaching the highest historical valuations. For instance, the sector’s next 12 months EV/EBITDA is around 11 times, which is quite underwhelming compared to its peak in 2020. The P/NAV ratio is currently 1.88 times the value of net assets, while it stood at 2.27 times back in 2020 and during 2011’s gold price highs.
Gold equities have responded to price hikes, albeit inconsistently. Major indices like the S&P/TSX Global Gold Index (+5.5% week-on-week), the Philadelphia Gold and Silver Index (+4.8%), and NYSE Arca Gold Bugs Index (+4.1%) have all jumped in response to bullion price surges. Notably, Frezniro has outperformed, soaring over 268% this year, underscoring the varying returns in the sector.
BOFA’s research hints at potential growth if current trends continue in monetary policy, inflation, and investment interest. Yet, the gold sector still represents a small fraction of the global equity market, with stock valuations still far from their historical highs. So for those observing the market, the explosion in gold prices is just part of the picture. The fundamentals suggest this surge isn’t simply a replication of past highs; thus, it’s vital to interpret “record high” in the right context.
