Returns Remain Strong as Market Volatility Creates Entry Points

Why It Matters

Understanding how volatility creates discounted entry points helps investors reallocate toward cash‑rich, best‑in‑class miners, preserving upside potential while navigating a prolonged risk‑off market.

Key Takeaways

• Geopolitical volatility drives commodity price swings and market risk
• Discounted valuations open entry points for best‑in‑class miners
• Cash‑rich mining firms outperform in higher cost‑of‑capital environment
• Portfolio rebalancing favors lower‑risk assets amid margin pressures
• Long‑term view essential as risk‑off sentiment likely persists

Summary

The episode centers on how heightened market volatility—spurred by geopolitical tensions and fluctuating oil prices—creates fresh entry points for investors. Eric F. and Sam Ples discuss the current macro backdrop, noting that every rise above $100 a barrel in crude triggers headlines of de‑escalation, while lower prices reignite conflict concerns. This uncertainty has pushed commodity prices, especially gold and copper, down 20‑60%, presenting buying opportunities for long‑term players.

Key insights include the strategic appeal of best‑in‑class mining stocks now trading at deep discounts. Northern Star, Australia’s largest gold producer, is highlighted as a prime example: after recent operational hiccups and a weaker gold price, its shares have fallen far below historical highs, offering a compelling re‑entry point. Similarly, Goldsky’s ongoing acquisition of the Barceli project creates a pricing anomaly that can be exploited. The hosts stress that firms with solid balance sheets and ample cash are better positioned to weather the rising cost of capital, avoiding the need for dilutive financing.

Notable quotes underscore the theme: “The window to get into Northern Star hasn’t been better since its inception,” and “Margin calls force funds to de‑risk, shifting capital toward lower‑risk, cash‑rich miners.” The discussion also touches on broader macro shifts, such as the weaponization of energy supplies and the potential re‑routing of LNG pipelines, which could reshape supply chains and influence sector allocations.

The implication for investors is clear: conduct a “spring cleaning” of portfolios, reallocating capital from high‑risk, leveraged positions to lower‑risk, fundamentally sound assets. While the risk‑off environment may linger, maintaining exposure through high‑quality miners at attractive valuations can provide upside while mitigating downside. This approach balances the need for de‑risking with the desire to stay positioned for a market rebound.

Original Description

Recording date: 31st March 2026

Olive Resource Capital is responding to a sharp, volatility-driven sell-off in mining equities by repositioning its portfolio toward higher-quality, more liquid gold producers — a strategy grounded in the view that institutional forced selling, rather than fundamental deterioration, is responsible for the bulk of recent price declines.

Speaking on their investment podcast, Samuel Pelaez, President, CEO, and CIO, and Derek McPherson, Executive Chairman, outlined a deliberate spring-clean of the firm's holdings. The core thesis is straightforward: when risk managers at leveraged funds are forced to de-risk portfolios rapidly, mining stocks — categorised as high-risk assets — are sold indiscriminately, regardless of underlying asset quality. The result is a repricing event that creates entry points disconnected from fundamentals, with valuations across junior and mid-tier gold names down 20–60% from recent highs.

Rather than chasing the steepest discounts at the riskiest end of the market, Olive is moving up the market capitalisation and liquidity spectrum. The two names at the centre of their repositioning are Northern Star Resources (ASX:NST) and Goldsky (TSXV:GSKR). Northern Star is Australia's largest gold producer and operator of the Super Pit, the country's largest gold mine. The company has delivered consistently against guidance for most of its fifteen-year history. Temporary operational setbacks over the past six months, compounded by broad gold price weakness, have pushed the stock to what Pelaez describes as the most attractive entry point since the company was founded. The operational issues are characterised as temporary; the asset quality and management track record are not in question. Olive is treating it as a multi-quarter accumulation, with scope to add further on any near-term earnings disappointment.

Goldsky presents a different but complementary opportunity. The company is consolidating 100% of the Barsele project through an ongoing acquisition process. McPherson notes the stock is trading in an unusual manner relative to its fundamental position, likely as a result of transaction mechanics rather than any change in underlying value. The completion of the Barsele acquisition is expected to serve as a near-term re-rating catalyst. Across both names and their broader portfolio, Olive's non-negotiable filter is balance sheet strength. Financing conditions have deteriorated sharply. Companies requiring capital raises are now doing so on materially worse terms — warrants and sweeteners that were unnecessary two months ago are now standard — while cashed-up operators can continue executing, maintaining momentum and avoiding dilution.

Looking ahead, the pair flag two key dynamics for investors to monitor. First, Q2 margins face a potential double squeeze: gold's average price is expected to be lower than Q1's exceptional levels above $5,000 per ounce, while rising energy costs — energy represents approximately 30% of open-pit mining costs — flow through from higher oil prices. Margins remain healthy, but the rate of expansion will slow. Second, M&A conditions are ripening. Compressed valuations, record producer free cash flow, and the psychological ease of offering premiums to depressed share prices create the conditions for an active deal calendar in the months ahead.

For investors willing to apply discipline and maintain a medium-term horizon, the current environment offers access to some of the highest-quality gold producer equities at valuations not seen in over a decade.

Learn more: https://cruxinvestor.com

Sign up for Crux Investor: https://cruxinvestor.com