Marin Katusa: Canada’s Money Metrics Crisis

“Resources have been a major part of Canada’s economic prosperity since its founding. Yet, many Canadians downplay these important assets, viewing resources as a “curse” or “Dutch disease.” Instead, we should count ourselves lucky to inherit such abundance.”

— Jack Mintz & Philip Cross, Canada’s Resource Sector: Protecting the Golden Goose

July 25, 2025 — Elbows up for Canada!

Canada just reclaimed its crown in global mining finance.

In 2024, the Toronto Stock Exchange and TSX Venture raised over $7.7 billion across more than 1,100 deals, according to TMX data. That’s a ~45% jump from the previous year. It puts Canada ahead of the ASX in mining finance leadership for the first time since 2020. Gold deals dominated. Lithium and uranium stayed strong. New listings surged. And once again, Canada looked like the world’s top destination for resource capital.

On the surface, this is great news.

Longer-term public market activity is collapsing. Mining IPOs are at record lows. Trading volumes are drying up. Capital outflows are accelerating. And even Canada’s own pension giant is putting more chips into U.S. assets.

There’s a dangerous split forming.

Canada’s stock exchanges are helping junior miners raise seed capital. But the follow-through funding needed to build mines, scale businesses, or go public is disappearing.

This split is already impacting the resource sector. Juniors can raise a few million to drill. But getting to +$300 million in equity mine project finance? That’s becoming harder and rarer, rarer than even a gold mine.

Without deep markets, institutional participation, and consistent liquidity, Canada risks becoming a place where projects start but don’t finish.

Meanwhile, crypto is becoming the new liquidity engine.

The global crypto market now clears $90+ billion daily, nearly 9x the TSX’s volume. Younger investors are migrating to liquidity and crypto assets.

So is the capital.

Exchanges that used to dominate small-cap trading, like the TSXV, are now dwarfed by digital markets.

So, is Canada truly back? Or is this a last spark in a fading fire?

The following charts highlight the fractures, some widening, some newly emerging across Canada’s capital market system.

The IPO Pipeline Has Collapsed

In 2021, Canada saw over 50 IPOs in the 2nd and 4th quarters. In June 2025, that number was just two.

This isn’t just a slowdown. It’s a shutoff.

The IPO market connects early-stage companies to public capital. Without it, innovation stalls. Growth delays. And exchanges lose relevance. Startups that might have listed on TSX or TSXV are either heading to the U.S. or skipping public markets entirely.

For mining and energy firms, this matters deeply. IPOs help juniors graduate. Without that path, even well-funded exploration stories may never reach production.

Canada’s Pension Giant Is Voting With Its Wallet

The Canada Pension Plan Investment Board (CPPIB) oversees over $700 billion. In 2021, 38% was in U.S. markets. Today, that number is 47%.

Meanwhile, CPPIB’s Canadian holdings dropped from 16% to just 12%.

That’s a sharp reallocation. It shows that Canada’s largest institutional investor sees more opportunity abroad than at home. This shift reflects deeper concerns about growth, scale, and liquidity within Canadian markets.

And CPPIB sets the tone for others. Hedge funds, family offices, and global funds follow that signal. For capital-intensive sectors like mining, this means fewer long-term partners willing to back the big stuff.

Capital Is Moving in One Direction – Out

Since January 2025, Canada has recorded four straight months of net capital outflows. In February alone, the country lost nearly $35 billion in net investment, its steepest outflow in years.

In May 2025, foreign investors dumped a net $2.8 billion in Canadian investments. At the same time, domestic funds sent $13.4 billion south of the border.

This kind of outflow creates a chain reaction. The dollar gets volatile. Borrowing costs rise. Institutional confidence fades. And domestic capital becomes harder and more expensive to raise.

Even if Canada attracts short-term inflows (like in mining financings), it means little if the long money keeps walking out the door.

Trading Desks Are Quiet, And That’s a Problem

• NYSE: around $150 billion/day
• NASDAQ: over $105 billion/day
• Crypto markets: over $100 billion/day
• TSX: around $10 billion/day
• TSXV: just $0.07 billion/ day

Volume is a vote of confidence. Big investors need liquidity. Retail traders want tight spreads. When volume shrinks, price discovery weakens, and spreads widen. That makes Canada less attractive for traders and long-term funds.

For mining and energy stocks, tight liquidity makes it harder to raise capital or justify coverage and usually comes with steep discounts to the market price of the equity. Even a small financing can tank a share price. That scares off institutional support.

Meanwhile, crypto markets, fast, liquid, and open 24/7, are now where a growing share of risk capital goes.

One Hand Full, One Hand Empty

Canada may have reclaimed its position as the top global mining finance hub, but the celebration is short-lived.

The funding surge is real, but it’s not enough.

The deeper ecosystem, i.e., IPOs, trading volumes, institutional confidence, capital retention is under stress. And if those cracks widen, even record financings won’t save the system.

Canada’s capital market doesn’t need to be flashy. But it does need to be functional. If it can’t support growth, scale, and long-term risk-taking, the rest of the world will and already is.

Regards,

Marin Katusa
Katusa Research and Grey Swan Investment Fraternity

P.S. from Andrew: For the past 15 years, investors largely ignored the resource space. Capital went elsewhere, often into tech names.

The result? An underinvestment today, as seen in Marin’s point about the drop in resource company IPOs.

That underinvestment the past 15 years is now shifting back to trend. That’s another sign that the resource boom is just getting started, and Canada will continue to play a key role in listing resource companies, providing much-needed access to financial markets for raising capital for further expansion.

But, as we noted on this week’s Grey Swan Live! with Shad Marquitz – now available for members on the site – not all resource companies are created equal. And when buying small-cap companies, it’s important to start with small position sizing, and to use limit orders to ensure you don’t overpay.

Your thoughts? Please send them here: addison@greyswanfraternity.com