Gold fever: Small-cap miners surging as bullion hits record highs

In 2025, the gold market has staged a remarkable rally. Year to date, the precious metal has gained nearly 57%, repeatedly setting new records and reaching around $4,380 per ounce. The surge was driven by geopolitical uncertainty, expectations of Fed easing, and record central-bank gold purchases. Investor interest has also spiked as gold is once again looked to as a preferred safe haven amid global economic turbulence.

This rally in gold coincides with rising equities, even though the metal’s historical correlation with stocks is close to zero. Such synchronized growth with risk assets raises questions about the sustainability of the current trend.

Riding the rally in gold, shares of small gold miners have also surged. To analyze this trend, analyst Aldiyar Anuarbekov has put together the Small Cap Gold Miner Index exclusively for Oninvest. It includes 49 gold producers with market capitalizations of up to $2 billion.

Unlike broader market indexes or ETFs, this index focuses exclusively on gold producers – companies with significant exposure to other commodities such as copper, silver, and/or oil are excluded. This ensures a pure gold correlation without earnings dilution from other materials.

The index is calculated as the Small Cap Gold Miner Equal Weight Index and as the 

Small Cap Gold Miner Cap Weight Index. Both indexes show a clear pattern: smaller gold miners have strongly outperformed their larger peers.

In 2023, the EW index rose 26%, while the CW index declined 11%, as smaller players outperformed while a few large names dragged the overall index down. In 2024, the EW index advanced another 33%, while the CW index added just 2%.

Since the start of 2025, both have soared alongside the broader gold rally: the EW index has jumped 133%, while CW has gained 108%. Shares of gold miners have thus outpaced the metal itself: gold prices rose about 51% over the same period, while the S&P 500 added roughly 17%.

The three-year compound annual growth rate was around 65% for the EW index versus 27% for the CW one. Despite slightly higher volatility (30% versus 27%, respectively), the EW portfolio achieved a superior Sharpe ratio – about 2.18 versus 1.00 – offering a much higher return for the risk taken.

Since early 2025, only five of the 49 companies in the index have posted negative returns – an unusually high level of synchronicity underscoring the extraordinary nature of the current market. The prolonged rise in gold prices has triggered a modern “gold rush” for small-cap sector names, with many doubling or tripling in value and drawing renewed attention from investors.

International Tower Hill Mines (ITH)

Shares of Canadian explorer International Tower Hill Mines have risen 280% since the start of 2025, peaking with a 576% gain. The company is not yet producing but owns one of North America’s largest undeveloped deposits – the Livengood project in Alaska, with estimated reserves of about 9 million ounces of gold.

In March, the firm approved a $3.7 million program to advance the project, followed by the first metallurgical study results, presented in September. According to MarketWatch data, the stock has a single analyst rating – “buy.”

Pantoro Gold (PNR)

Australia’s Pantoro Gold, which is revitalizing its historic Norseman mine, has surged 235% since January. For fiscal 2025 (ended June 30), the company reported a net profit of AUD66 million ($43 million) versus a loss of AUD46 million ($30 million) a year earlier. Gold output rose 18.5% to 84,600 ounces, with 110,000 ounces expected to be produced in fiscal 2026 and over 200,000 ounces a year longer term, supported by Norseman’s resource base. The company ended the year with AUD176 million in cash and no debt. The MarketWatch consensus for Pantoro is an “overweight” rating.

Caledonia Mining Corporation (CMCL)

Caledonia Mining Corporation has strengthened its reputation as one of Africa’s most stable gold producers. Its shares have climbed more than 190% in 2025.

In the fiscal second quarter, revenue grew 30% year over year to $65.3 million, while net income jumped 147% to $20.5 million. Output at the Blanket mine in Zimbabwe reached 21,000 ounces.

Caledonia is also developing the Bilboes, Motapa, and Maligreen projects. The company also sold a solar power plant for $22.4 million, freeing up capital for expansion. Wall Street analysts have assigned three "buy" ratings and one "hold" to Caledonia.

Even after the October pullback, gold remains one of 2025’s top-performing assets, and a moderate correction is viewed as a healthy pause in an overheated market. Analysts at Saxo Bank note that pullbacks often reveal the true strength of a trend – and gold still enjoys solid support from investment demand.

Investing legends, however, urge caution. Bill Gross, cofounder of PIMCO, called the rally a "momentum/meme asset" move. "If you want to own it, wait awhile," he wrote in mid-October.

Historical parallels also suggest a turning point. According to Bloomberg Intelligence, rapid gold surges like that in 2025 have often coincided with the end of high-inflation cycles and preceded economic slowdowns. The combination of record gold prices, falling oil, and calm equity markets recalls the late 1970s, the Great Depression, and the onset of the 2008 crisis.

In other words, a gold boom often signals that the inflation peak has passed. The market may be sensing a shift from inflation risks to economic cooling.

While this is only one scenario, it offers cautious optimism – gold has fulfilled its defensive role during the inflation phase, and its future path will depend on how strongly the global economy slows. If stocks start to retreat, gold could keep up its outperformance. Otherwise, the rally may pause – until the next bout of economic turbulence.

According to the latest forecasts, major investment banks remain upbeat on gold through the end of 2026: Société Générale expects prices to reach $5,000 per ounce; Goldman Sachs $4,815 per ounce; JPMorgan $4,390 per ounce; and Standard Chartered $4,750 per ounce.

This material does not constitute investment advice.

The AI translation of this story was reviewed by a human editor.