After a strong run for precious metals, gold mining shares still look undervalued.

That’s the view from JP Morgan’s latest note on listed producers, which argues there’s room for substantial upside, especially if its bullish forecast for the precious metal proves right.

Its commodities team is pencilling in a price of $4,100 an ounce for 2026. That’s well above current spot levels of $3,320 and would mark a new all-time high.

Based on that estimate, JP Morgan sees around 40–50 per cent upside to average analyst expectations for earnings before interest, tax, depreciation and amortisation across the sector.

While the American bank focused on the larger producers, citing names such as Fresnillo and Hochschild, there’s plenty of value lower down the evolutionary chain.

Stocks on this layer of the pyramid are increasingly disconnected from the rising gold price, rather than moving in step.

Of course, being small and mid-cap companies, it often takes time for the market to focus on inherent value, even when backed by gold. These smaller players are also more prone to operational mis-steps that larger organisations can absorb.

Forecast: JPMorgan’s commodities team is pencilling in a gold price of $4,100/oz for 2026

Below is a far-from-scientific roll call of gold stocks that have thus far flown under the radar.

Probably the pick of the bunch is Pan African Resources, which, with a £940 million market capitalisation, has broken free from the small-cap bracket. While its share price is up around 30 per cent year to date, it still lags the performance of Endeavour (+51 per cent) and Fresnillo (+80 per cent).

Dropping down a division, Caledonia Mining stands out. Its performance has been stronger than Premier African and it comes with a very decent dividend.

As valuations shrink, the link between the gold price and share price weakens. A case in point is Ariana Resources, which has modest production from its Turkish operations but ambitious growth plans in Zimbabwe.

Panmure Liberum analysts, fresh from a site visit to Ariana’s Dokwe project, described it as a potential multi-million-ounce asset with strong development prospects.

That optimism is in stark contrast to Ariana’s stock market performance, down more than 40 per cent year to date. It suggests value and opportunity may be buried in AIM’s twilight zone.

Ariana is preparing to list in Australia, a savvy move in a market where investors, both private and institutional, know how to value smaller gold companies.

Appetite for diggers and prospectors is strong, supported by self-directed flows from Australia’s generous superannuation schemes. So, watch this space.

Wider market moves

Turning to the wider market, the AIM All-Share continued to outperform its benchmark, rising 1.3 per cent to 746.39 and outpacing the FTSE 100, which nudged just 0.4 per cent higher.

This reflects growing confidence, underlined by a slew of successful fundraisings that made May a bumper month for companies replenishing their coffers.

The week’s standout performer was Blue Star Capital, which jumped 150 per cent after news of its investment in cross-border crypto payments platform SatoshiPay.

Avacta rose 43 per cent, a performance that would have topped the leaderboard most weeks. The appointment of two heavyweight independent directors helped ease investor concerns over a delay to the company’s results. 

One of the new recruits, Richard Hughes, brings deep capital markets experience, possibly signalling a strategic shift for the precision medicines group.

ATOME climbed 35 per cent following the launch of a new renewable energy division, initially focused on Latin America.

And the laggards…

At the other end of the table, Totally fell 84 per cent as investors digested the healthcare provider’s semingly insurmountable funding position.

Watkin Jones dropped 21 per cent after the developer of student housing and build-to-rent properties posted a loss and painted a gloomy picture of current trading.

Finally, the small-cap market, especially where trading is thin or controlled by market makers, tends to react sharply to news, with professional price-setters often moving to protect positions rather than reflect true value.

A case in point is hVIVO. Shares slumped 45 per cent on Friday following the loss of one contract and the postponement of another.

Seasoned small-cap investors will know that sanity usually prevails, but it can take time for stocks like hVIVO to find their footing.

In the meantime, it’s worth remembering this is a business with £47million of contracted revenue already secured for the current year and, as of its last results, £44million in cash.

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