Cash-strapped small-scale miners set to drive the upcoming surge in gold stocks - Kevin Smith of Crescat

Mining Sector Sees Renewed Optimism, Focus Shifts to Junior Explorers

Since the middle of 2025, the mining industry has experienced a resurgence in positive momentum. Unlike previous bull runs, however, the current uptrend has been concentrated mainly among major producers and royalty firms, rather than being widespread across the sector.

The VanEck Gold Miners ETF, which tracks leading global precious metals producers, has soared by over 200% since early 2025. In contrast, the TSX Venture Index—representing smaller developers and exploration companies—has climbed 85% during the same period.

Although mining stocks have posted impressive gains, gold investors still have opportunities to participate in the sector’s growth. According to Kevin Smith, Founder and CEO of Crescat Capital, the next stage of the rally may be fueled by renewed investment in junior exploration companies, which have seen limited funding for more than ten years.

During an interview at the 2026 Prospectors & Developers Association of Canada (PDAC) convention, Smith observed that this year’s event reflected heightened enthusiasm for mining, even as some investors remain wary.

“There’s a noticeable shift in atmosphere,” Smith remarked, pointing to larger crowds and increased activity throughout the convention. “Attendance is up, there are more exhibitors, and finding a seat is nearly impossible.”

While this renewed interest signals growing attention for mining, Smith noted that many investors are still reluctant to deploy capital, despite the strong performance of gold and mining stocks over the past year.

Smith emphasized that, despite concerns about missing out, Crescat Capital continues to invest actively in mining equities and believes the sector is still in the early stages of a long-term upward trend.

“We’re definitely buyers,” he stated. “Many investors may feel they’ve missed the boat, but we believe this cycle has much further to run.”

Smith highlighted the appeal of junior exploration companies, which have suffered from a lack of funding for over a decade, resulting in underexplored resources and supply constraints.

“Our focus is on the exploration segment, which has faced a prolonged capital drought, leading to significant mismatches between supply and demand,” he explained.

Crescat’s investment approach centers on early-stage exploration firms, where the potential for significant discoveries—and outsized returns—remains highest.

However, Smith acknowledged that investing in junior explorers carries considerable risk and demands specialized technical knowledge.

“You need to target large, Tier-1 geological prospects,” he advised. “And it’s essential that these projects are located in regions where mine development is feasible.”

While factors like management quality, jurisdiction, and capital structure are important, Smith stressed that the underlying geology is the ultimate determinant of a project’s success.

Limited Discoveries Signal Long-Term Potential

One ongoing challenge for the industry is the scarcity of major new discoveries in recent years, which Smith attributes to the extended period of underinvestment in exploration.

He also pointed out that this lack of new finds creates opportunities for investors, as the competition among producers for new resources could eventually drive up valuations across the sector.

Another reason some investors remain cautious is the uncertainty over whether elevated gold prices can be sustained, Smith noted.

Following a period of significant volatility in metals markets, Smith suggested that a phase of price consolidation could help restore confidence among institutional investors.

“It’s healthy to pause and consolidate,” he said, noting that such pullbacks provide chances for investors to build positions during market dips.

Looking Forward: Capital Rotation and Gold’s Central Role

Smith anticipates that the next leg of the precious metals rally will be driven by a global reallocation of capital—from overvalued large-cap technology stocks into commodities and tangible assets.

“We refer to this as the great rotation,” he explained. “Funds will begin to move out of expensive mega-cap equities and into undervalued commodities and hard assets.”

In this shifting landscape, gold remains a key asset. “Gold is the premier hedge against the dollar,” Smith asserted.

He believes that as investor confidence gradually returns, supported by rising metal prices and renewed exploration success, the mining sector could experience a sustained rally.

“Strong performance attracts capital,” Smith concluded. “There’s significant upside ahead that will draw more investors into the space.”