The Commodity Cycle Has Only Just Begun: Samuel Pelaez on Why the Gold Pullback Is a Gift and Trillions Are Still Coming

In a detailed conversation on Mining Stock Education with host Brian Leni, Olive Resource Capital CEO Samuel Pelaez explains why the recent correction in gold and gold equities represents one of the best buying opportunities of the cycle, how liquidity will broaden into copper and the real economy, and why global under-allocation to mining points to trillions of dollars still waiting on the sidelines.

When Samuel Pelaez, CEO and Chief Investment Officer of Olive Resource Capital, joined Brian Leni on Mining Stock Education, he did not offer the usual hedged outlook that dominates so much resource-sector commentary. Instead, he delivered a clear, experience-tested thesis: the long-term drivers of the commodity cycle remain firmly intact, the dramatic rally of the past two years was merely a teaser, and the sharp pullback in gold and gold mining stocks has created a high-quality entry point that disciplined investors should not ignore. For Canadian mining investors navigating volatile gold prices near the $4,000 level, multi-billion-dollar copper development projects, and an ever-changing M&A landscape, the discussion provided both immediate tactical insight and a robust long-term framework.

The Capital Flows Argument: Trillions Waiting in the Wings

Pelaez began with a structural observation that underpins his entire outlook. Global equity markets currently allocate less than 1% to mining, metals, and energy in many cases. A reversion even to long-term historical averages of 5–10% would redirect trillions of dollars into the sector.“We live in a world where companies have trillion-dollar valuations,” he said. “Why can’t our companies have trillion-dollar valuations?” His colleague Derek at Olive has described the coming shift as “pouring a whiskey bottle into a shot glass.” The receiving vessel — publicly traded mining and metals equities — is simply too small relative to the volume of capital that could arrive once institutional and retail allocators rebalance toward the physical economy. Data centres, grid expansion, electrification, and continued demand for transportation fuels all require more copper, more gold, more critical minerals, and more energy. Pelaez sees no meaningful demand destruction on the horizon.

Why the Gold Correction Is a Buying Opportunity

The conversation turned quickly to the Federal Reserve and the recent gold sell-off. Pelaez is constructive on the appointment of Kevin Warsh and the expected collaboration with Treasury Secretary Scott Bessent. Both men built careers understanding the plumbing of markets and the movement of liquidity. Their focus, in his view, will centre on allowing capital to flow more productively through the real economy rather than simply injecting ever-greater volumes of liquidity into a high-debt system. That transition carries direct implications for commodities. Gold is the asset most tightly correlated with liquidity in financial markets. When that liquidity begins to broaden into the real economy, the precious-metals rally should expand into copper, oil, and eventually other industrial commodities.In the meantime, the correction itself has been severe. Gold’s decline from the $5,400 region toward $3,900, and the even steeper drawdowns in senior producers such as Agnico Eagle and AngloGold Ashanti (approximately 60% of the prior advance given back), represent what Pelaez calls the kind of “minute opportunities that you get every year.” Last year’s tariff-related sell-off provided a similar window. Olive Resource Capital has already begun adding to its gold positions in recent days. Pelaez watches the charts of the major gold producers daily. He regards a sustained rebound in those equities as the signal that the commodity correction is ending. He does not require gold to print exactly $3,800 before acting; the current zone is already sufficiently attractive.

The Cycle Broadens: From Precious Metals to Copper and Beyond

Three months earlier, Pelaez believed the most compelling opportunities had shifted outside precious metals. The depth of the gold-equity correction has prompted him to re-engage with quality gold names, yet the broader sequencing of the cycle remains unchanged. Precious metals typically lead; industrial metals and bulk commodities follow once liquidity and economic activity broaden. Iron ore may remain capped by strong supply growth, but copper stands as the clearest beneficiary of the next phase. Here Pelaez offered some of the interview’s most practical insights for investors in junior and intermediate developers.

Copper’s Harsh Arithmetic: Capex, Know-How, and the Shareholder Registry

Large porphyry copper projects routinely carry upfront capital costs in the multiple billions of dollars. Capex, however, is only one barrier. Access to specialized technical expertise and the limited global pool of labour capable of building complex mines is equally critical. The market understands this reality. Projects that are too large or too technically demanding for a junior to execute independently tend to be acquired — but not always at premium valuations. What separates a top-dollar takeover from a discounted one is often the strength of the shareholder register. When a company counts a major such as Agnico Eagle or a sophisticated group of institutional investors among its largest holders, the market assigns a higher probability that the project can actually be financed and built. That perceived ability to advance independently raises the eventual acquisition price. Companies lacking such sponsorship face a steeper discount because they do not represent a credible threat to develop the asset alone. Pelaez inverted the conventional focus on sticker price. In a multi-decade copper demand environment, absolute capital cost becomes secondary to project quality. The handful of truly tier-one deposits — those capable of ranking among the world’s top five or ten copper mines with multi-decade lives — will be acquired at full value. Strategic buyers are not primarily shopping on price; they are shopping for enduring relevance and a seat at the table in the global copper market. Water scarcity in the high Andes remains a genuine challenge for several high-quality projects. Pelaez noted that the market frequently “piggybacks” on the due diligence of sophisticated cornerstone investors. When a company of Agnico Eagle’s calibre is the largest shareholder, investors reasonably assume the water question has been thoroughly examined.

M&A in a High-Price Environment: Permitting Takes Precedence

Looking at merger and acquisition activity, Pelaez identified three primary drivers: jurisdiction, permitting timelines, and project quality. Of these, permitting currently carries the greatest weight. With commodity prices elevated, acquirers want production as soon as possible. A five-year permitting horizon is far less attractive than a project that can break ground in the near term. This preference explains the recent focus on producing or near-production assets and the orderly hierarchy observed in certain gold jurisdictions. It also explains why policy initiatives such as FAST-41 in the United States and permitting reform discussions in Canada matter. Pelaez’s rule is absolute: never invest against government policy. Governments can outlast, outspend, and out-litigate any private company. Alignment with the direction of policy is non-negotiable.

Portfolio Construction: Concentration Over Diversification

Perhaps the most actionable section of the interview for individual investors concerned position sizing. Pelaez sits firmly at the concentrated end of the spectrum. He described Olive’s portfolio as an inverse pyramid: one large core position, a small number of meaningful secondary holdings, and a longer tail of smaller exploration positions kept deliberately modest because of risk and time-decay. He expressed little enthusiasm for portfolios containing 70 or 100 names. “You can’t realistically follow 70 companies… or at least you can’t follow them well.” Extraordinary lifetime returns, he observed, almost always come from a small number of outstanding winners. Diluting those winners across dozens of mediocre positions is the enemy of outperformance. His theoretical maximum for a single name is 100%, though he acknowledges that extreme concentration carries its own risks — citing a previous Yukon investment that collapsed overnight after a civil-engineering failure. In practice, approximately 20% of portfolio value represents a reasonable ceiling for a top holding: large enough to drive results, small enough that a total loss does not end the enterprise.

Names on the Radar

Pelaez’s largest current position is Omai Gold Mines, which he described as an impeccably managed company that has delivered spectacular resource growth at what may be record-low discovery costs per ounce. The project has already surpassed eight million ounces in a tier-one jurisdiction. Looking ahead, he is closely following Prospector Metals as the company conducts its second major drill campaign, seeking to expand last year’s exceptional discovery holes along strike and to depth. He also highlighted a still-private company, Sun Valley in Uruguay, led by young South African geologist Crystal Stemmet. The project offers rare exposure to an underexplored belt and is expected to list in the autumn; it will be drilled for the first time in 14 years.

The Bigger Picture

Throughout the discussion, Pelaez returned to the same core conviction. The world under-invested in the physical foundations of economic growth for more than a decade. The recent price strength in commodities is not the culmination of the cycle; it is the market beginning to recognize the imbalance. When capital finally rebalances toward mining, metals, and energy at even a fraction of historical norms, the scale of the inflows will be difficult for the current universe of publicly traded companies to absorb without substantial re-rating. For Canadian investors evaluating gold’s consolidation near $4,000, capital-intensive copper developers, and the constant flow of junior promotions, the conversation between Brian Leni and Samuel Pelaez on Mining Stock Education offered a rare combination of tactical clarity and strategic perspective. Treat major corrections in high-quality names as opportunities. Demand realistic paths to production. Concentrate capital where conviction is highest. Align with government policy. And remember that the trillions have not yet arrived. When they do, the companies that emerge from the current volatility with strong assets, strong shareholder registers, and strong balance sheets will be positioned to capture the largest share of the re-rating.

Disclaimer: 

This article is for informational and educational purposes only and is based on a publicly available interview conducted by Brian Leni of Mining Stock Education with Samuel Pelaez of Olive Resource Capital Inc. It does not constitute investment advice, a recommendation to buy or sell any securities, or an endorsement of any company mentioned. Mining and exploration equities involve substantial risk of loss, including the possible loss of principal. Readers should conduct their own due diligence and consult qualified professional advisors. Past performance is not indicative of future results.