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Investing.com -- The global gold sector’s market capitalization has surged past historical highs but remains far from previous peaks when measured against the broader market and on key valuation metrics, according to analysts at BofA Securities.
Data from the S&P/TSX Global Gold Index show that the sector’s total market capitalization now stands just above $550 billion.
That figure is nearly twice the cyclical peaks of 2011 and 2020, when the industry reached $334 billion and $331 billion, respectively.
The current level is also more than three times the 2022 cycle low of $170 billion and eight times the 2016 trough of $70 billion.
Yet despite the sharp rebound, the sector’s relative size has lagged. “As a percentage of total world equity market capitalization, the gold sector is now 0.39%,” BofA said. “While this is roughly in-line to the 2020 peak of 0.38%, it is sharply lower than the 2011 peak of 0.71%.”
Valuations tell a similar story. On a next 12-month EV/EBITDA basis, the sector is trading at 11.0x, below the 15.4x peak in 2020 and the 11.7x peak in 2010.
On a price-to-net asset value basis, the sector stands at 1.88x, compared with 2.27x in 2020 and 2.19x in 2011.
“Both measures suggest room for valuation to expand,” the brokerage noted. Adjusted for spot gold prices, the current multiples fall further, with NTM EV/EBITDA at 11.7x and P/NAV at 1.39x.
The performance of bullion has added to the spotlight. Gold climbed above $3,500 per ounce last week and reached a record $3,600/oz on Sept. 5, after weaker U.S. jobs data fueled expectations for rate cuts.
The yellow metal ended the week at $3,589/oz, up 4.1%. Gold equities tracked those gains, with the S&P/TSX Global Gold Index up 5.5%, the Philadelphia Gold and Silver Index advancing 4.8%, and the NYSE Arca Gold Bugs Index rising 4.1%.