There is still plenty of upside in the mining sector as bull market euphoria has yet to materialize, says Soar Financial CEO

In the last 12 months, VanEck Gold Miners ETF (NYSE: GDX) has rallied more than 160%, currently trading at $106.22. After years of underperformance, the precious metals equities have significantly outperformed the gold market, which has rallied 98%, currently trading at $5,125.80 an ounce.

While the mining sector is attracting new capital, Soar Financial CEO Kai Hoffmann said in an interview with Kitco News that the market still has plenty of upside potential as it lacks the euphoric sentiment that traditionally signals market peaks.

Although the world’s largest mining ETF is near record highs, Hoffmann said that this momentum is largely a reaction to higher metal prices rather than a fundamental shift in investor psychology.

“This market is price-driven, not sentiment-driven,” Hoffmann said on the sidelines of the conference. “We’re seeing more money flowing into the space, but the narrative hasn’t really changed yet.”

Hoffmann noted that while the sector is attracting new capital, particularly from generalist investors, the broader reallocation away from other asset classes has yet to materialize. He added that many investors are still heavily focused on technology and artificial intelligence-related stocks rather than rotating meaningfully into mining equities.

“The conversations I’m hearing aren’t about investors getting out of AI or other sectors to move into mining,” he said. “Yes, we’re attracting more people, but we’re not yet at the point where investors feel they need to reallocate toward mining.”

Hoffmann said a clearer signal that the bull market has entered a stronger phase would be the return of large institutional investors that historically played a major role in the sector.

While some institutional participation is returning, particularly from pension funds, Hoffmann said the market still lacks the type of broad-based exuberance typically associated with the later stages of a bull cycle.

Instead, the current rally is being driven by strong fundamentals within the sector. Mining companies are generating record margins and free cash flow as gold prices continue to rise.

“We’re seeing big financings and strong cash flow from the producers,” Hoffmann said. “But it’s not frothy yet.”

He said that one factor that could attract larger institutional investors back into the sector is a stronger focus on capital returns.

Hoffmann noted that while stock buybacks have generated headlines, many institutional investors—particularly insurance companies—are more focused on reliable dividend income.

“I think we’re on a healthy path with increasing dividends and share buybacks,” he said. “For large institutional investors, it’s important to show they can generate steady returns, even in a flat year.”

Although mining companies now have healthy balance sheets in recent history, Hoffmann also noted that the sector faces structural challenges, particularly when it comes to maintaining production growth.

He said that many of the world’s largest gold producers are facing declining production profiles, which complicates their ability to expand dividends or demonstrate long-term growth.

“The problem is that production for many of the majors is declining,” he said, noting that companies such as Barrick, Newmont and Agnico Eagle have all seen output trends weaken in recent years.

At the same time, Hoffmann said major new discoveries remain scarce, which further limits growth opportunities for the industry.

“We really haven’t had any major discoveries in the last couple of years,” he said. “The last meaningful one was Snowline’s Valley discovery, and that was a few years ago.”

Despite these challenges, Hoffmann said the sector’s improving fundamentals continue to support the broader bull market narrative. With gold prices near record highs and mining companies seeing expanding margins, he expects capital to gradually move further down through the sector, from large producers into developers and eventually exploration companies.

For now, however, he said investors remain focused primarily on the largest producers.

“The action is still in the big companies,” Hoffmann said. “As gold keeps rising, the margin expansion there is just insane.”