The mining stocks have been absurdly hot in the past year, and they’ve really helped power the TSX Index to significant outperformance relative to the S&P 500. Undoubtedly, if the materials names can keep it up, perhaps the Canadian stock market has another year of strong results up its sleeves.
While there has been broad strength across the broad basket of commodity miners, much of the momentum has been concentrated in the precious metal plays. Unsurprisingly, the gold and silver miners have become so smelting-hot that even some of the AI plays out there can’t keep up. Any way you look at it, the gold and silver trade is where the excitement is starting off 2026.
But the big question remains whether it’s too risky to get in now, given the risks of a blow-off top. Undoubtedly, whenever you have such a sudden commodity price boom, investors should be fully aware of the downside risks. Though the “debasement trade” and macro factors are working in favour of the price of gold, one must ask oneself how much of such a thesis is already priced in.
The precious metals are smelting hot: But are they too hot to handle?
We’ve already seen a remarkable run in the precious metals. And the tailwinds lifting up prices have pretty much been common knowledge for many quarters now. And while geopolitical jitters and the potential for a spill in the AI names (software stocks led the plunge on Thursday’s trading session) could certainly power gold, silver, or just about any other metal miner higher, I’d much rather watch for a correction or worse before putting a huge sum after such a roaring rally. While I’m still a gold bug, I do acknowledge that we’re fresh off a historic run and everybody is rushing in.
Momentum trading can result in huge gains, but, at the same time, such gains’ potential comes with considerable risk. In any case, for investors looking to get into the trade, I’d argue the miners are the best way to do it. I don’t think the premier miners have had enough opportunity for their multiples to catch up with the roaring rally in gold (and silver). Regarding relative value, the miners shine, at least in my view, over physical ETFs or bullion.
Barrick Mining: Relative value in a red-hot industry
Barrick Mining (TSX:ABX) shares have really melted up in 2025, but even those red-hot shares can go down, as we witnessed on Thursday, when shares slipped just north of 2%. Of course, the move was a tiny blip compared to the past-year rally. In any case, I think any such dips are buyable, given that gold might stay at these heights for longer.
Though the 24.8 times trailing price-to-earnings (P/E) multiple looks a bit pricey, I’d argue that big earnings compression could loom, especially if gold prices prove unstoppable. If a spin-off unlocks more value (and efficiencies) and other metals (think byproducts of gold production) also rally, ABX shares may still be severely undervalued by investors at $70 per share. In my view, Barrick is the gold-mining value play, and it’s got more runway than some of its pricier peers out there.
Finally, I think the 1.3% yield is a bonus. If gold strength persists, I’d look for a very generous dividend hike as cash flows look to swell above and beyond as a result of the unprecedented boom in gold, silver, copper, and other metals.
